Carphone cuts broadband forecast and gives cautious outlook

LONDON (Reuters) - Mobile phone retailer and telecoms group Carphone Warehouse (CPW.L) cut its forecast for new broadband customers this year, and said it remained cautious about the outlook for consumer spending.

Europe's biggest independent mobile phone retailer, which also provides fixed-line telecommunications and broadband, said on Thursday it now expected to add 200,000 to 250,000 broadband customers this year and revenues at its fixed-line telecoms business to be broadly flat.

The group had previously forecast fixed-line revenue growth of 4 to 5 percent, with 400,000 broadband additions, though it warned in June that this might have to fall.

"While the second quarter has started well, with a sharp pick-up in subscription connections on the back of the iPhone 3G launch, we remain understandably cautious about the consumer environment," Chief Executive Charles Dunstone said in a statement.

Carphone, which runs about 2,400 stores, warned in June that a slowdown in consumer spending and a housing market demand was hitting demand for broadband, sending its shares sharply lower.

The stock has underperformed the DJ Stoxx European retail index .SXRP by 26 percent this year.

Carphone said distribution revenues rose 4 percent to 735 million pounds in the 13 weeks to June 28, with mobile connections rising 12 percent to 2.6 million.

The firm agreed in May to sell 50 percent of its European and U.S. retail interests to U.S. group Best Buy (BBY.N) for 1.1 billion pounds, creating a joint venture to take on DSG (DSGI.L) and Kesa (KESA.L) in Europe's consumer electricals market.

Carphone shares closed at 192.8 pence on Wednesday, valuing the business at about 1.7 billion pounds.

(Reporting by Mark Potter; Editing by Mike Nesbit)