Shares digital

by John Marshall

A year-end trading update from mobile phone retailer and services supplier Carphone Warehouse has been met with a raft of forecast cuts. Assad Malic, an industry expert at Credit Suisse, and Maurice Patrick of Bear Stearns, slashed their target prices for the shares by 9% and 16% respectively, as concerns filter through about the company’s rising debts.

Carphone Warehouse has seen its debts rise thanks to holding a large portion of its borrowings in foreign currencies – mainly euros and Swiss francs: hedges against non-sterling assets – against which sterling has been particularly weak recently.

However, according to the analysts, this could increase net debt by around £120 million this year, and coupled with subscriber acquisition costs, overall borrowings look set to jump by as much as £170 million by the end of March 2009.