‘I’m absolutely not interested in why it can’t happen’

Charles Dunstone wants Carphone Warehouse to be the Tesco of telephony. ‘You grow your market share, provide the best service at the best price and keep investing the gains you make into the business to make prices even more competitive.’ It is a typical Dunstone statement: simple to say, hard to do. It is no coincidence that his chairman at Carphone is the former Tesco buying director John Gildersleeve, part of the team that helped Tesco overtake Sainsbury’s a decade ago. ‘Charles has a remarkable hunger to do the right thing for customers,’ says Gildersleeve, echoing the Tesco mantra. ‘He has not got a big ego that gets in the way, but he is absolutely obsessive.’

Such obsession means that the company Dunstone started from his flat in 1989 with £6,000 already sells one in five mobile phones in Britain, and is the brand trusted by customers to sort out the best mobile phone for them. Profits in the year to April rose by a third to £100 million before tax; and with a market value of £2.9 billion Carphone is knocking on the door of the FTSE 100. The competition is in disarray. Last week DSG, the former Dixons, sold its 60 per cent in The Link retail chain to the mobile phone operator O2 for a paltry £30 million. In the words of one shareholder, ‘Carphone ate them for breakfast.’

Carphone now has 650 of its blue-fronted shops in British high streets and shopping centres, and another 1,300 or so spread across Europe, trading under the name Phone House. Dunstone is rolling out new shops at more than 200 a year. ‘He has never been interested in taking over the competition,’ one investment banker says, ‘only in annihilating them.’

It is scary stuff, but not as scary as taking on BT with Talk Talk, Dunstone’s landline-based ‘challenger brand’, which now has well over a million customers. It will soon have a lot more. A ‘free broadband forever’ offer in April to customers who switch landline providers has prompted a stampede that exceeded even his wildest dreams. His personal blog on the company website reads, ‘Since April 11th an amazing 340,000 people have signed up against our internal forecast of 170,000 by now.’ He admits the company has struggled to cope with demand but says, ‘we are working through the orders as quickly as we can …thank you for your patience and understanding….’

At the Acton headquarters of Carphone Warehouse the reception area buzzes with purpose while two television screens keep visitors abreast of the news. There is a comfortable seating area and a superior vending machine. When I struggle to extract a cup, a helpful young man appears as if by magic. Up on the first floor, Dunstone’s office is little more than a spacious alcove adorned with yachting trophies. Glass sliding doors separate him from a vast open-plan office where his young, ethnically mixed workforce beaver away at their desks.

Dunstone appears in the doorway, shorter and younger than he looks in photographs, discards his jacket and sinks on to a seat. He is both ordinary and extraordinary, the sort of chap you would follow into the jungle without knowing why. There is no swashbuckling ego, no slick management speak, no hilarious anecdotes, no outward sign that he is worth north of £800 million; yet he emanates total confidence. ‘Charles is completely comfortable in his own skin,’ says Lord Stevenson, the chairman of HBOS, where Dunstone is a non-executive director. ‘He spent the first two years in our board meetings hardly saying a word. You have to be very confident to do that.’

Dunstone is also, by his own admission, unreasonable. ‘I constantly put unreasonable timescales on projects and people are surprised when they achieve it.’ He believes that only the paranoid survive and that complacency is the number one enemy. ‘We have got to be first with new products, we have got to be on time, and I am absolutely not interested in why it can’t happen.’

Offering ‘free broadband forever’ was a risk no other potential competitor of BT had been prepared to take — and using Maureen Lipman, formerly known as BT’s ‘Beattie’, to help him launch Talk Talk showed a certain chutzpah. ‘People are saving a lot of money with free broadband,’ he explains simply. ‘It will save the average household around £250 a year. People like that.’ He is not too perturbed that competitors are rushing to catch up. ‘If you are the first to offer customers something, they think you are doing it for them; if you are the second, they think you are doing it for your own benefit.’

The only son of a BP executive, Dunstone was born in 1964 and brought up in Saffron Walden in Essex. He went to a day school in Cambridge before attending Uppingham — fellow alumni include the television presenter Johnny Vaughan and Dunstone’s business partner David Ross. ‘It was a relaxed and happy school …I had a great time.’ For a couple of terms he ran a little business selling sunglasses, lighters and pens: he did the buying and Vaughan the selling. He also fell in love with sailing, a passion that has remained with him. He had a place at Liverpool University to read business studies but the call of work was stronger. ‘I just wanted to go and do things.’

His first proper job was with the Japanese company NEC selling mobile phones the size of bricks to companies such as Vodafone and Cellnet to resell for use in company cars. ‘It struck me they were missing the real market,’ says Dunstone. ‘I realised that the people who got the most from mobile phones were the self-employed who needed to be contactable while they were out working.’

So at 25 he left NEC and started selling phones from his flat. After the flat’s landlord complained, he moved into a little shop in Marylebone and was soon joined by Ross. The first big leap forward came in 1993 when digital technology arrived and line rentals halved from £30 to £15 a month. The next step-change came with the discovery of text messaging. ‘Text was originally a nerdy thing invented by engineers to communicate with each other,’ he says. ‘Nobody ever thought the public would use it.’ But the young embraced it and today more than 80 per cent of Britons have a mobile phone.

Each year brings more gizmos to persuade customers to change their phones but, although Dunstone can bore for Britain on the next new thing, he spotted some time ago that the whirligig would one day slow down. Having built a brand that customers trust, the invasion into landlines is not just daring, it is necessary.

As well as running Carphone, Dunstone sits on the board of HBOS and the Daily Mail and General Trust, and chairs the Prince’s Trust’s commercial arm, which runs events such as Party in the Park. Some might wonder how he finds the time — although as a bachelor he does not have the distractions of family life.

Outside work Dunstone likes a spot of adventure. In April 2005 he spent 10 days walking to the North Pole. He still sails, and has recently taken delivery of a new 52ft yacht called Red which he will be skippering at Cowes this August. ‘We just spent a weekend trying to learn to sail it,’ he says with a nervous laugh. In between adventures he enjoys really good food and is a regular at the River Café in Hammersmith, not far from his home. ‘I think it is the best food, not just in London, but anywhere I ever go.’ He likes the restaurant so much that last year he spent a day cooking there. ‘I did prep and watched how it worked from the inside. I love the fact that they never compromise.’

Neither does he — and so far his customers seem to like him for it. The trick Dunstone has to pull off if he truly wants to be the Tesco of telephony is to avoid the vilification that goes with size. But for the moment, at least, he is still perceived as the plucky challenger.