The Carphone Warehouse has been blown away by the response to its "free broadband forever" promotion with demand for the bundled product exceeding its own forecasts.

TalkTalk - Carphone's retail phone business - only launched its bundled offer of line rental, calls and broadband for £21 a month in April. Since then, some 340,000 punters have signed up to the service, prompting Carphone to say that the "initial demand for free broadband [is] significantly ahead of expectations".

Indeed, writing in his blog, Carphone boss Charles Dunstone said that according to the firm's own internal forecast it should only have around 170,000 sign-ups.

"Our Free Broadband Forever product has exceeded our most optimistic expectations, with 340,000 customers now having applied for the service. Responding to this much greater than anticipated growth, we have answered many more calls and handled many more sales enquiries than had been planned, with the result that we have connected more customers in the first eight weeks than we had planned to do in the first four months."

This surge in demand has put pressure on TalkTalk's ability to handle so many enquires with punters complaining of long queues trying to contact the firm. To Carphone's credit, at least it owns up to the problem. In his latest blog, Dunstone admits that "we have strained to cope with the calls and emails", and he thanks people for their "patience and understanding".

He's also told punters that anyone signing up today would not go live with "free broadband" until August.

And rivals have been quick to jump on this. In a statement Orange [until recently Wanadoo] said that as one of Europe's biggest broadband providers, it has lots of experience in this market.

"That's why our customers don't have to wait three months to sign up like they might to do with some new market players. Free Broadband from Orange is available today."

Today's update from Carphone comes as the firm reported that revenue for the entire group rose 29.4 per cent last year from £2.35bn to £3.05bn. Headline pre-tax profit was £136.1m, an increase of 35.5 per cent on the year to March 2005. Pre-tax profit after reorganisation costs and other charges was down 11.9 per cent from £91.9m to £81m. ®

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