Welcome boost for Dixons Carphone

Competitors woes help improve sentiment towards mobile phone retailer Dixons Carphone.

A Carphone Warehouse branch
Source: Bloomberg

Recently amalgamated mobile phone retailer Dixons Carphone is due to report its first-quarter trading update on 9 September. Without the backdrop of historical data from the combined two companies, markets will find it more complicated to ascertain how well the company is doing when it reports. But of the six institutions rating the firm there are two strong buys, two buys, one hold and one strong sell.

The combination of these two brands will see a company tailoring its business to try and take advantage of the shifting demographics of the modern consumer. The difference here is that between the two companies they will not just be looking to sell the hardware available in the telecommunication sector, but they will also be looking to sell both the software and assistance the customers will need to fully use these products.

As the functionality of smartphones, tablets and the plethora of alternatives has improved, the complexity of the products has also increased. Dixons Carphone believes it has found a niche in the market, where others have failed to cover the education and assistance that some consumers require.

The improved coverage of the UK that these two companies now have has already seen Vodafone give notice to Phones 4U that it will not be extending its network agreement with the company past February 2015.

It is still early days but so far all the signs are that this new company will benefit from cost saving and improved coverage, which should see the shares continue their move higher and look to test the 400p level last seen in 2011.

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