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Dixons Carphone in deal with Sprint to open U.S. stores

A person walks by a Sprint store in Pasadena, California May 4, 2015. REUTERS/Mario Anzuoni

LONDON (Reuters) - British electrical goods and mobile phone retailer Dixons Carphone (DC.L) has sealed a deal with Sprint Corp. (S.N), the U.S. mobile network operator, that could see it open and manage up to 500 Sprint-branded stores in the United States.

Dixons Carphone, formed last year from the merger of Dixons Retail and Carphone Warehouse, said on Thursday its business-to-business division, Connected World Services (CWS), had signed the deal with Sprint, which has about 60 million customers in the United States.

Shares in Dixons Carphone, already up a quarter over the last nine months, rose as much as 4.7 percent.

"For Dixons Carphone, the deal with Sprint allows the company to dip its toe in the waters of a U.S. market that, while competitive, is certainly compelling in terms of scale," said Neil Saunders of retail research group Conlumino.

A first phase of the deal will see CWS supply mobile phone retail expertise and proprietary knowledge to Sprint, which will open about 20 retail stores.

If these stores prove successful a second phase would see

CWS invest $32 million in a 50/50 joint venture that could potentially roll-out 500 stores. Dixons Carphone will also provide support across the whole of the Sprint estate.

Analysts said if the second phase was enacted it could be a springboard for Dixons Carphone to further expand into digital consumer electronics in the United States.

Investec analyst Alistair Davies said a full roll-out could imply a 6-7 percent upgrade to Dixons Carphone's profit numbers in the future.

"This is a very exciting venture for us, and is a significant step in growing our CWS business in the U.S.," said Andrew Harrison, Dixons Carphone deputy group CEO.

Both sides of the merged group are no strangers to the U.S. market. Dixons owned the Silo consumer electronics chain in the 1990s, while more recently Carphone Warehouse had a joint venture with U.S. group Best Buy (BBY.N).

Dixons Carphone shares were up 6.4 pence at 465.5 pence at 1058 GMT (6:58 a.m. EDT), valuing the business at 5.4 billion pounds.

($1 = 0.6407 pounds)

(Reporting by James Davey; Editing by Sarah Young and Mark Potter)