Carphone Warehouse getting ready for break-up

Telecoms company The Carphone Warehouse (parent operator of broadband service TalkTalk) has revealed it will be announcing a demerger of its retail and telecoms interests next week.

Although the break-up isn't likely to take place until 2010, Carphone chief executive Charles Dunstone looks set to reveal plans on the execution of a demerger during the company’s fourth-quarter update meeting.

With a huge presence on the UK high street, Carphone retail shops sell mobile phones and mobile broadband dongles, as well as enticing customers to sign up to fixed-line phone and broadband services.

A company break-up would involve juggling £925 million of Carphone’s credit facilities. According to analysts at JPMorgan, it’s this hefty figure that will stop the demerger happening any quicker.

Although it sounds like drastic news, Dunstone remained openly positive about the decision to demerge, insisting it shouldn’t be seen as a step towards selling off the telecoms business in its entirety.

Currently the third largest broadband supplier in the UK with Talk Talk, Carphone still has a chance of acquiring troubled Italian-based provider Tiscali. Although previous offers for an acquisition have been declined, with the heat now firmly on for Tiscali to sort its finances quickly, Carphone is still a potential contender.