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Last updated: October 12, 2006 1:02 pm

Vodafone drops Carphone Warehouse

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Shares in Carphone Warehouse the mobile phone retailer, plunged more than 16 per cent after Vodafone announced rival chain Phones4U would be the exclusive third-party high street retailer for Vodafone contract customers in the UK.

Currently about 15 per cent of Vodafone’s UK contract users are estimated to sign up via Carphone Warehouse outlets, forming around 20 per cent of the retailer’s customer basis.

Analysts expect Carphone Warehouse will lose more than 350,000 customers.

Consumers will still be able to choose Vodafone’s pay as you go service from Carphone Warehouse outlets, but the decision will undermine the chain’s range of offerings.

Vodafone has been looking to reduce the cost of acquiring customers, and it is understood that it will get better terms from Phones4U.

In early trading, Carphone Warehouse shares fell 11.2 per cent at 320p, erasing all of their gains on Thursday after Carphone said it was buying AOL’s internet access business in the UK.

Carphone said in a statement that it did not expect any impact on market forecasts as a result of Vodafone’s moves. On Thursday it forecast group pre-tax profit for the year ending March 31 2007 to be £120m.

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