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Demand for smartphone based on Google's Android operating system drives Carphone sales up by 3.7%

Strong demand for smartphones based on Google's Android operating system has helped Carphone Warehouse to report sales growth ahead of City expectations.

Speaking after Carphone announced a 3.7% jump in sales to £794m for the last quarter, chief executive Roger Taylor said Android had made big strides during 2010 and was likely to keep driving sales through the rest of the year. "This time a year ago we would have been saying that the smartphone demand was mainly for the iPhone and the BlackBerry, but we've seen a real advent of Android in the last three to six months," he said.

Most of the large handset makers now offer Android phones, such as HTC's top-end Desire handset and the Sony Ericsson Xperia X10, giving customers a wide range of platforms to choose from. "We've been waiting for years for this situation to arrive, and it finally has," Taylor said.

But while smartphone sales are booming, fewer people are signing up for more basic handsets, leading to a 1.1% drop in Carphone's total number of mobile phone customers. Data released this week by GfK showed that one in 10 contract handsets sold in Britain now run Android, with sales up by 300% since the start of this year.

Android's success in the smartphone space is a direct challenge to Apple's iPhone. Taylor declined to say how sales of the two compared, saying that iPhone demand had also been strong during the quarter. He also denied that the well-documented with the iPhone 4's antenna had affected sales. "We're seeing an incredibly low return rate for the iPhone 4," he insisted. "It's an over-hyped concern."

Analysts had expected Carphone's sales to grow by 2%, and shares in the company rose by over 6.7% to 230.5p today. Analysts at Credit Suisse said it was a "robust performance".

Carphone said it still expects to increase like-for-like retail sales by up to 3% for this financial year as a whole. Taylor said tablet computers such as Apple's iPad, which launched this year, will help to drive revenues. "All the big consumer electronics companies are launching tablets ... it's a really competitive environment," he said.

Best Buy Europe, Carphone's joint venture with US retail group Best Buy, has now opened three UK stores. Taylor said the initial customer response had been very encouraging, although he also conceded that there is a lot of work to do to build the Best Buy brand in Britain. Credit Suisse said that there could be up to 10 Best Buy stores in the UK by next March.

Carphone also appeared to be more optimistic about the state of the UK economy, with Taylor saying he did not expect to see a double-dip recession this year.

Demand for mobile data boosts Vodafone revenues

Mobile phone operator reports its first quarterly service revenue growth since the recession

Strong demand for mobile data has helped Vodafone increase its service revenues for the first time in 18 months, as its key markets recovered from recession.

Britain's third-largest mobile phone operator today reported a 1.1% rise in service revenues to £10.58bn in the last three months, reversing a trend that began in the final quarter of 2008. Revenue from data services such as smartphones and high-speed internet "dongles" jumped by 25%.

"These are the first quarterly results to show service revenue growth since the global recession impacted," said chief executive Vittorio Colao.

"We have achieved these results through our continuing commercial approach in key European markets, focusing especially on data, and from strong growth in emerging markets, with India now cash-positive at an operating level and our highest ever quarterly revenue in Turkey," he added.

Colao also said that Vodafone would announce a change of strategic direction in October, to "drive shareholder value". This is understood to include a new focus on data services, especially in emerging markets like India and China.

Colao declined to give further details this morning, saying it would be "disrespectful to his board", but hinted that it may be driven by the increased number of mobile operating systems on the market today.

"The world has changed," he told reporters. "Many operating systems are strong and competing … this is a good opportunity to have a look at our strategy."

Vodafone saw strong growth in demand for smartphones in Europe during the quarter, particularly in the UK where the company started selling Apple's iPhone earlier this year.

Since taking over as chief executive in summer 2008, Colao has been trying to increase growth in Vodafone's existing territories rather than continuing with the acquisition drive that has given it stakes in markets around the world.

Vodafone also announced today that it has finally resolved a long-running dispute with the UK tax authorities. This row centred on Vodafone's decision to register Mannesman, the German mobile giant it acquired in 2000, in Luxembourg.

HM Revenues & Customs had claimed that Vodafone owed taxes in Britain under the Controlled Foreign Companies rules, which the mobile operator disputed. It has now agreed to pay £1.25bn to settle the case, having previously made a provision of £3.1bn on its books.

Shares in Vodafone rose 1.88% this morning to 151.85p.

Business arm of Easynet sold to private equity group for £100m – but Sky retains its fibre infrastructure

BSkyB has sold the business-to-business arm of Easynet, the telecoms company it acquired for £211m to drive its broadband and telephony businesses, to a private equity group for £100m.

BSkyB, which acquired the business in 2005, is to sell Easynet Global Services to LDC, a British private equity group.

Sky said the deal, which will be subject to regulatory approval, will not affect its operating profit expectations for this financial year. It retains the UK network assets of Easynet, but LDC will have a long-term access agreement for the fibre network that supports Sky Broadband and Sky Talk.

"The acquisition of Easynet was central to the early success of Sky Broadband and Sky Talk," said Andrew Griffith, Sky's chief financial officer. "While retaining the UK network assets to support the continued growth of our residential customers, we propose to exit the B2B segment with the sale of the business to a credible team and on attractive terms."

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Minister seeks high-speed broadband access ideas

Culture secretary wants telecommunication companies to come up with plans for universal access to broadband

The government will take its first steps towards tackling Britain's broadband divide this week when it holds a summit to discuss ways of introducing high-speed internet access across the country.

Jeremy Hunt, culture secretary, will ask communications providers for ideas on how to give every home access to a basic broadband connection at an Industry Day in London on Thursday.

The meeting will also attempt to address the issue of availability of the next-generation of super-fast broadband services. At present, millions of homes and small businesses are excluded from new fibre-optic based networks being built largely in urban areas.

Having abolished Labour's 50p a month broadband tax – a levy on fixed phone lines that was designed to raise funds to tackle the broadband divide – the coalition government says it remains committed to giving everyone a high-speed connection of at least 2 megabits a second by 2012.

About 160,000 UK homes still cannot get a broadband connection at all – a decade after services were first introduced. While BT's ADSL broadband network now covers 99% of the population, technical limitations mean 2m homes cannot get at least 2Mbps. Industry figures welcome the government's commitment to broadband, but warn that Hunt faces a clear dilemma – how to persuade telecoms companies to build commercially unviable networks in more rural areas in a time of austerity. Thursday's gathering will examine how subsidies can be used to give commercial firms an incentive to invest, but the challenge of achieving full broadband coverage is formidable.

In Finland, broadband has recently been declared to be a human right. But Olivia Garfield, BT Group strategy director, warned that Britain's budget deficit means the government is not in a position to mandate that broadband be available to everyone in Britain."I cannot see it happening here, given the budget deficit we have." Garfield told the Guardian.

She is hopeful that Hunt can provide "certainty and clarity" to the 80-plus companies attending Thursday's event about the administration's plans, including three pilot projects where public funds will subsidise introduction of broadband in existing blackspots. The location of these trials has not yet been released.

The government has committed about £300m to fund broadband schemes, money left over from the digital switchover fund. Hunt declared last month that he wants Britain to have "the best superfast broadband network in Europe" by the end of the current parliament in five years time.

BT is spending £2.5bn to introduce a new fibre-optic based network in Britain. By 2015, this should reach two-thirds of the population, giving speeds of up to 40Mbps, but BT does not currently plan to extend the network further. Virgin Media customers can already get similar faster speeds, and other telecoms operators are also building out fibre. But commercial considerations mean they are all focused on more urban parts of Britain.

"Unless the government has a few spare billion, it's not going to resolve this issue on Thursday," Garfield commented.

BT argues that it cannot be expected to build expensive fibre networks to areas where there are too few houses to generate a return. But the company admits that it, along with the government, will be criticised by those who find themselves trapped on the wrong side of a new broadband divide in a few years time.

"It will be so tough to understand that some people have faster speeds and you are still struggling with a slower connection," predicted

Garfield. "There will certainly be a minority of people who want to blame someone, and they will blame us as well as politicians and the rest of the industry. We understand that."

Some telecoms firms believe that the government's plans are not ambitious enough. David Palmer, senior product manager at managed services provider Star, argued that the universal broadband target should be raised above 2Mbps to support the latest web-based services.

"We are seeing a growing trend of UK businesses using cloud computing and on-demand services, and the primary enabler for this is higher bandwidth," Palmer said.

A spokesman for Broadband Delivery UK, the government body organising the Industry Day, said there were no plans to raise the 2Mbps target. He also indicated that the government was keen to hear about ways that regulations could be changed to aid the industry, as well as suggestions for public subsidies.

The CWU was warned by its lawyers that 'technical breaches' meant BT would probably have overturned the result in the courts

A ballot that could have brought more than half of BT's staff out on strike has been cancelled following legal advice.

The Communication Workers Union abandoned the vote after its lawyers warned that "technical breaches" meant BT would probably have overturned the result in the courts.

It is the latest in a series of strike actions to have been defeated by the lawyers, and comes six months after British Airways won an injunction against the Unite union in the high court that prevented a strike over Christmas. In May a later BA injunction was lifted by the court of appeal.

Neither BT nor the union would reveal precisely how the CWU's ballot might have broken Britain's trade union legislation. It is understood that BT's employee relations department had written to the union several times in recent weeks, flagging up potential problems with the balloting process.

The decision to abandon the ballot is a blow to the CWU, which had been due to announce the results today. Its deputy general secretary, Andy Kerr, said the decision showed that Britain's trade union laws are unfairly restrictive.

"We're bitterly disappointed that this ballot has had to be cancelled. It's devastating for our members and for trade union rights in the UK and it doesn't help to resolve the outstanding issues over pay which we have with BT," Kerr said.

The CWU had held the ballot after rejecting BT's offer of a 2% pay rise plus bonuses worth £500, and demanding a 5% increase. A walkout could have disrupted BT's services, making it harder for the company to handle customer calls or fix faults. The union has about 55,000 members within BT's overall workforce of nearly 100,000, mainly working as engineers or in its call centres.

Several other attempted strikes have collapsed in the past year, after lawyers argued that balloting processes were not fully in accordance with Britain's labour relations laws.

"Today's outcome would suggest that the CWU has accepted that the company has made a decent case that the union made errors in the balloting process," said Marc Meryon, industrial relations lawyer at Bircham Dyson Bell. "For BT to make headway it must have shown that these mistakes were significant ... The union is the author of its own misfortune to have got into this predicament."

The CWU said it would ballot its members again for a new strike vote, but would also reopen negotiations with BT.

BT said it welcomed the decision to drop the ballot.

"There were procedural issues regarding the ballot that we raised from the start and the union have now accepted this to be the case," said a BT spokesman.

"Our door remains fully open to the union so we hope we can sit down and resolve this matter. An amicable agreement is in everyone's interest and the withdrawal of the ballot provides both sides with a window of opportunity in which to reach such an agreement."

The CWU's climbdown comes as relations between unions and the government come under pressure. Today the Cabinet Office denied that ministers were planning to cut redundancy terms due to civil servants, a move that could have lowered the cost of slimming down the public sector. Employers groups are also calling for further tightening of trade union legislation. Last month the CBI said unions should need to secure the support of at least 40% of all workers before a strike would be legal as well as a majority of those who vote.

Members of Prospect, the second-largest union at BT, recently voted in favour of the pay deal the CWU has rejected.

The BT dispute has been rumbling on most of this year but escalated in May after it emerged that chief executive Ian Livingston received a bonus of more than £1m. He was given a 6% pay rise for 2010 but promised to give4% to charity.

Analysts have warned that industrial action could cause major problems for BT,especially if it ran for some time.

The company bounced back into the black in the last financial year, with a pre-tax profit of just over £1bn. But its revenues are in decline, a trend that is not expected to reverse until 2012/13.

BT staff last went on strike in early 1987. Then, the disruption ran for more than two weeks until BT agreed to a two-year pay rise worth 12.66%.

Response: All phone users will gain from this plan to reduce rates

Don't be taken in by the empty threats from the big four mobile operators

Readers of your news article could be forgiven for believing that the prospect of the vast majority of UK consumers paying lower prices for calling mobiles would cause the sky to fall in (Reform of mobile phone charges may leave poorest users worse off, June 22). The four biggest mobile operators have been scaremongering with variations on this theme for years.

You report the end of telecoms watchdog Ofcom's consultation on "its plans to slash the cost of calling a mobile phone ... by reducing so-called mobile termination rates – the price networks charge each other and fixed-line companies such as BT to connect calls". The article states that O2 has "warned the regulator that its proposals are 'irresponsible' and could force millions of people on low incomes to abandon their phones".

Every time the prospect of lower mobile termination rates is raised, operators have cried that prices would go up and that people would stop using their phones. But a quick glance at the facts shows that when rates have come down the exact opposite has happened.

My company, Three, is part of a broad campaign along with BT and 65 other organisations – ranging from charities to financial advisers – that recognise high termination rates as a barrier to lower mobile prices. Orange, Vodafone, O2 and T-Mobile seek to pull off a bold double act by threatening to raise prices yet at the same time quietly introducing more competitive rates every time termination rates come down – as they have done again this year.

The article states: "The industry has warned that the likely shake-up will lead to the reintroduction of controversial 'expiry dates' on prepay top-ups." Again, effective competition will address this threat.

High termination rates have been a net subsidy to the mobile industry from landline users for years, but the bills paid to call mobiles by vulnerable landline users and the organisations that support them never feature in the analysis from the big mobile companies. The Terminate the Rate campaign includes Age UK, Crossroads Care and Carers UK who work with the vulnerable all day, every day and know their experience.

Low termination rates will enable effective competition in the UK voice market. They will drive better value for mobile and landline users alike. Since these threats are being made by those who want to delay this change, then as the only mobile operator supporting it we have to make our own case. While Vodafone claims that changes "could see the end of mobile handset subsidies", we have committed to continue to offer subsidised handsets. Rather than cutting off prepay customers, we expect to serve more.

That the four major operators don't welcome change is no surprise. But ultimately it is our firm belief that high mobile termination rates don't protect low users, they create them.