Carphone Warehouse has won compensation from BT for the debacle over its TalkTalk broadband service, it emerged yesterday, as Europe’s biggest mobile retailer unveiled plans for a fresh assault on Britain’s competitive fixed line market.

Charles Dunstone, Carphone’s head, said that BT’s Openreach division, which he had consistently said should take some of the blame for TalkTalk’s problems, had paid out for delays in transferring Carphone’s customers.

The emergence of the pay-out, believed to be in the low millions, came as the mobile retailer unveiled better-than-expected full-year earnings of £294 million on revenues up 31 per cent to £3.9 billion, and provided evidence that it is close to overcoming the problems with its broadband service.

Mr Dunstone said Carphone is poised for a fresh aggressive assault in the fixed line market. He said: “We have broken the back of the broadband problems. We are going to have a proper run at BT now. We’re back to being all over them and trying to make them honest.”

Background

• BT slashes bonuses for managers

• BT pays for fiasco over Carphone’s broadband

• BT admits it made mistakes with Fusion

• BT to spark landline price war

• BT turns up heat on Virgin Media

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BT will have to stay on it's toes in the tough new world of convergence

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The group, the country’s third-biggest broadband provider, is also weighing up plans to use its network to offer a wholesale service to other communications providers, he said.

Carphone had hoped to revolutionise the broadband market when it launched a service last April that is free to customers signing up to a £20.99 calls package. However, the launch was undermined by long customer waits and technical issues. Yesterday, Carphone revealed that waiting times for the service, once up to 14 weeks, are now less than three weeks. Around 80 per cent of new customers, it said, are placed straight on to Carphone’s network instead of going via a resold BT product.

Analysts at Deutsche Bank said that the results showed “clear improvements in broadband execution”.

The group’s new assault on the fixed line market kicked off yesterday with a cut in TalkTalk’s line rental to £10.50 from £11 and an offer of free international calls to 30 countries.

The retailer is also preparing new products and advertising to win market share and hit its target of 3.5 million broadband customers and five million residential customers by 2010.

Poor experiences with rival communications providers has helped BT in recent months to stem the rate of loss of customers deserting its traditional calls business. In the last half-year around 30,000 customers left the former monopoly, down from half a million in the previous year.

BT said Carphone “may well have received compensation” as part of remedies if service levels fall below an “appropriate standard”.

Responding to Carphone’s price cuts, BT said: “Yet again, Carphone is following BT's lead. They've been forced to copy many of our price cuts but have also thrown in some smoke and mirrors for good measure.”

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