Talk Talk, the broadband service run by Carphone Warehouse (CW) is going to cost the company an an extra £30m to run in the 2007-8 financial year. Talk Talk is widely thought to be a loss-leader for Carphone Warehouse. Alongside this, the running of Virgin Mobile France is also proving very costly for the group.
The company stated yesterday that profit for 2007 should meet market expectations but analysts have lowered their profit forecasts due to woeful experiences with broadband and joint venture costs.
CW launched it’s free broadband service Talk Talk last year to much praise, however the service has been plagued by problems for users from the beginning and CW has rumoured to be struggling to cope with the high demand for the service. It has already had to find extra money to pay for customer service and technical issues and is now looking for an extra £10m to £15m to run operations up until March 2008.
Roger Taylor the finance director for CW stated ‘we originally guided that broadband will have lost £50m in 2007. It looks like that figure will now be closer to £70m to £75m.’ After this Taylor expects to make a £15m profit on broadband in 2008, although some analysts are doubting this, a possible reason for CW’s shares dropping by 15% in the last three months.
To counter these problems, CW have called in the service of the Geek squad, initially only in areas of London, but if successful will expand. The Geek squad originated in America, with just one man, a bike and $200. This has now expanded into a large US outfit, and has now made its way across the big pond to the UK. The employees known as ‘agents’ wear a special uniform including a sleeved white shirt, a black clip-on tie with a geek squad logo pin, black trousers or skirt, white socks and black shoes. Special/double agents also wear badges. They will be traveling around London in Vespa’s and aim to solve as many problems with Talk Talk as possible.
Top 10 have their say
Despite all these problems CW are still rumoured to be buying Pipex, however we think it may be more wise to fix their own problems before adding to them. Many Talk Talk customers have got in touch with us and have been waiting a long time to get connected, spent hours on customer service lines and once live, broadband connections are reportedly failing regularly.