High-powered chief executives are not averse to muddying the waters. Last month, when called to confirm market rumours that he was on the verge of snapping up AOL UK for £370 million, Charles Dunstone, chief executive of Carphone Warehouse, denied that such a deal was imminent.

Less than 16 hours later, he had bagged the acquisition — This newspaper had lost its scoop. So, when asked for an interview, the request was fast-tracked.

As it turned out, the deal marked much more of a turning point in the history of Carphone — which Mr Dunstone grew from one shop in London to a £2.5 billion business — than anyone realised. It was a scene-setter for the most spectacular fall that Europe’s largest mobile phone retailer had endured in its 17-year existence. The next day, while Carphone was still celebrating its victory, Vodafone, its biggest and longest-standing client, announced that it was switching its contract phone business to Phones 4U, Carphone’s high-street rival.

The move undermined Carphone’s entire retail model of providing impartial advice across the gamut of mobile phone networks. In two days nearly 16 per cent was wiped off the company’s value as investors and analysts digested the surprise and unwelcome announcement.

The setback came as the business, in which Mr Dunstone and David Ross, his co-founder, retain a near-56 per cent stake, was still wrestling with a swath of unhappy broadband customers after problems with its “free” internet offering. Suddenly, after years of plain sailing and boringly good results, Carphone had hit a crisis point.

Today in the group’s bleak headquarters (how a multimillionaire motivates himself each morning to drive to a support centre in North Acton is a mystery), Mr Dunstone is plotting his “comeback”.

While his focus, he says, is “consolidating what we have got, integrating the AOL business and getting local loop unbundling settled”, it is apparent, too, that if the right opportunity came up in today’s blink-and-you’ll-miss-it communications market, he would not let it pass by.

He is not convinced yet, he says, of the merits of buying content to provide a broad-band television service. And although the business needs a breather after the breakneck activity of the past year, he will, he concedes, “always look” at any new broadband customer bases that come on the market (Tiscali, he says, is a name that bankers keep putting before him).

Providing a broadband service wholesale — as done by BT and Cable & Wireless — is also not entirely ruled out: “Maybe in the future . . . but at the moment our priority is to work flat out to connect our own customers,” he says.

As well as losing a slug of his core retail business with the Vodafone switch, Mr Dunstone, who has 1,921 retail stores spread across Europe, must now fight back against a high street that seems to feature as many mobile phone shops as coffee bars.

As Vodafone and its peers O2, Orange, T-Mobile and 3 seek to compete better in a cut-throat market, they are slashing costs, in part by cutting out the middle-man and selling more phones through their own branded stores.

“It [the loss of the Vodafone contract] is not a situation I am happy with,” Mr Dunstone concedes. “We have lost one piece of that choice we can offer. But what we offer is still a much better proposition for customers than going to a store that has a limited choice. People want to go to one place where they can see as much of the marketplace under one roof as they can.”

Anyone who stands and listens to customers in his store will realise, he says, that it is the handset, not the network, they care about.

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