The owner of Carphone Warehouse and Dixons has warned that more expensive mobile phone handsets and lower EU roaming charges will hurt its profits.
In an unscheduled statement, the company stated that the scrapping of EU roaming charges for people using mobile phones abroad and customers not upgrading their phones as frequently because handsets have risen in price, has led shares to fall more than 30%. It said profits this year would be £360m to £440m, down from £501m last year.
The innovation of the newest handsets means phone users are typically holding onto their handsets for four to five months longer, Dixons Carphone’s executives said. It is hoped the launch of the next iPhone, the iPhone 8 in the Autumn, will boost ailing sales after the disappointment of the iPhone 7. The Samsung Note 8 however is expected to cause less of a impact.
With regards to EU roaming charges, the Carphone Warehouse business model sees the retailer take a slice of the value of customers’ phone contract. Now no extra charges apply with in EU countries, a drop in profits made in this say would impact the business by up to £40m. The new legislation introduced in June means all calls, texts and data customers use in the Europe Zone will come out of their normal UK allowance. Essentially, roaming in Europe feels just like home!
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