Carphone pushing its' luck to the limit?
Carphone's network division, Opal won a “corporate” GSM licence in April and it is no surprise that someone at Opal would one day start mentioning Fixed-Mobile Convergence. It is becoming more and more apparent as the mobile operators move into the broadband space and Carphone move into the mobile space that they there could be a clash between its’ traditional paymasters and its’ expansion plans. We can now add relationship risk to the Carphone business.
To summarize, Carphone on its’ broadband project have basically bet the farm and put a lot of things at risk:
- business model – that the economics of the ULL bundle works in the marketplace;
- project timing – on a CPS + Broadband Resale basis, CPW are losing money, they have to turn the ULL equipment on and have the provisioning complete ASAP;
- technological – Huawei MSANs + Sonus kit are going to be stress tested;
- relationship – are the mobile operators going to reduce CPW retail commissions as CPW compete more and more with the operators?
Personally, I’d be quite worried about the risk. Perhaps, the CFO who has an inside view is also worried and perhaps it is unrelated but has decided to cash in the majority of his chips by selling 1 million shares.