(Bloomberg) -- Dixons Carphone Plc plunged after warning of “significant” losses in its mobile business over the coming year as U.K. consumers upgrade their phones less often and shift to cheaper contracts.

The continuing problems in the mobile arm compound the woes at Dixons, which was already struggling to recover from a profit warning and a cyberattack last year. The shares fell as much as 28%, the most since 2017, and they’ve lost about half their value over the past 12 months.

The company had warned in December that the U.K. mobile landscape was shifting, but said now that the changes are accelerating as consumers switch to more flexible contracts rather than long-term fixed ones. As upgrades to handsets become more incremental, the retailer is losing out on the former bonanza from shoppers rushing out to replace them every six months or so.

“This means taking more pain in the coming year, when mobile will make a significant loss,” Chief Executive Officer Alex Baldock said in a statement.

Dixons said it will renegotiate contracts with wireless operators and integrate the mobile business with its electronic arm, leading to improvement in the following two years.

“The principal reason that U.K. mobile is struggling is that the group is locked into punitive contracts with the U.K. network operators which require it to meet certain volume commitments, irrespective of market conditions, and that these contracts run out during FY 2020/21,” Morgan Stanley analysts Geoff Ruddell and Amy Curry said in a note.

The company recorded costs of 20 million pounds ($25.4 million) for the data leak, as it reported full-year earnings before interest and taxes that met analysts’ average estimate. Dixons predicted adjusted pretax profit this year to be around 210 million pounds, roughly 30 percent below market expectations.

(Updates with shares in first paragraph)

--With assistance from Lisa Pham.

To contact the reporter on this story: Eric Pfanner in London at epfanner1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier

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