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Carphone figures beat City hopes
Carphone Warehouse has reported better than predicted like-for-like sales
Demand for the new Samsung smartphone and a wave of promotions have helped Carphone Warehouse weather the slump in its pay-as-you-go market.
Its like-for-like sales were down 2% in the three months to the end of June but this was much better than the 6% or 7% fall predicted by City analysts because of the absence of affordable smartphones in the pre-pay market.
Carphone reported "encouraging" growth among contract customers, boosted by the Samsung Galaxy S3, which is mounting a challenge to Apple's iPhone.
The group, whose Europe arm has 2,400 outlets, is also boosting its post-pay markets with a series of offers, including on the Samsung Galaxy Note tablet.
Shares rose 5% on Friday as it said it was on track to meet its previous guidance for the current year to March.
It believes earnings for the current year are likely to be between £130 million and £150 million, compared to £135 million last year, depending on its success in pre-pay markets.
Pay-as-you sales have slumped by as much as 40% in recent months after the regulator ordered a cut in the rates that operators charge to handle other networks' traffic, resulting in subsidies on mobile handsets being slashed.
The weakness in its pre-pay markets saw overall connections fall nearly 18%. But Carphone remains hopeful that the pre-pay market will recover this year as manufacturers produce more affordable smartphones. It recently offered the first Windows operated Nokia handset for under £100.
Chief executive Roger Taylor said: "As anticipated, the pre-pay market continues to be weak, but we remain confident in our opportunity to reinvigorate this market by driving smartphone penetration into this segment, particularly in the second-half."
Its Virgin Mobile France joint-venture had a good quarter, with revenue growth of 13% to 122 million euros (£95.6 million), which was also better than City forecasts.