* EE posts record margins on contract demand
* Carphone Warehouse posts better than expected sales
* TalkTalk records second quarter of sales growth
By Kate Holton
LONDON, July 24 Demand for high-end smartphones
on long-running contracts helped Britain's largest mobile
operator EE and phone retailer Carphone Warehouse to
post better than expected results on Wednesday.
EE, owned by Orange and Deutsche Telekom
, said it had grown first-half earnings by 9 percent
and posted its highest ever margins as demand for mobile
contracts, including those running on its superfast fourth
generation network, jumped ahead.
The group added 216,000 new contract customers in the second
quarter. It said it had 687,000 customers on the 4G network and
was on track to exceed its target of one million by the end of
The leap in core earnings, helped by more customers taking
longer contract services as opposed to prepaid offerings, came
despite a 4.4 percent fall in second-quarter service revenue,
which records the provision of ongoing services and strips out
one-off costs such as handsets.
The fall in service revenue was broadly in line with that
reported last week by Vodafone, the country's third largest
mobile operator behind EE and Telefonica's O2.
Analysts at Espirito Santo said the results showed the cost
savings promised at the formation of the EE joint venture in
2010 were coming through.
Chief Executive Olaf Swantee said the group aimed to
increase its margins to 25 percent by 2014, from the current
22.9 percent. This would come via a combination of customers
paying more for faster services, and cost savings.
The demand for longer-term contracts in Britain also helped
Carphone Warehouse in its first quarter, with like-for-like
sales up 10.6 percent compared with a consensus forecast of 8
Chief Executive Roger Taylor told Reuters the firm had seen
an increasing number of customers opt for longer contracts as
that enabled them to buy phones such as Apple's iPhone
and smartphones from Samsung.
On a busy day for the British telecom sector, fixed-line
operator TalkTalk said it had posted its second
successive quarter of year-on-year revenue growth, with 8,000
new customers joining in the first quarter.