Carphone rings up a decent Christmas as rivals suffer

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For the first time since the mobile phone went mass market in the 1990s, sales fell this Christmas.

"The market has certainly not grown and if anything has fallen," said Carphone Warehouse chief executive Charles Dunstone, unveiling quarterly figures for the 13 weeks to 27 December. "That makes our like-for-like sales growth of 8.3% in the UK all the more creditable.

"It is certainly a case of winning market share but you won't find many sales figures like that anywhere along the High Street."

The sales growth however has come at a cost. "Margins will be lower," said Dunstone.

"We found our customers wanted extremely good value. We priced accordingly and put a lot offers out there.

"Our priority was to keep volume and market share. We, like everyone else, are having to work hard to get people to spend.

"But we have two things that work very well in our favour: there is always a fast pipeline of new product coming onto the market and the network operators are paying for much of that product and keeping the price down."

Carphone is embarking on a critical year with plans to open its first Best Buy megastore in the UK in league with its American electricals ally and plans for a strategic overhaul with the retail business demerged from its TalkTalk/AOL broadband provider.

Hanging over Carphone has been the unseemly departure of chairman David Ross, long-time friend and business partner of Dunstone, after pledging his substantial shareholding in Carphone to fund private ventures.

Dunstone today denied Ross's departure was delaying decisions on retail expansion and demerger, but declined to say what progress had been made.

Carphone said quarterly retail revenues were up 13% at £1 billion. TalkTalk revenues slipped 2% to £347 million but per customer broadband revenues rose 5%.