Carphone Warehouse said trouble getting its broadband service to work and start-up costs for its Virgin Mobile France joint venture would cost it an extra £20 million to £30 million in its 2007-8 financial year.

The British firm, which is making a loss on its broadband service and has already had to find extra money to pay for technical and customer service problems, said yesterday the ongoing issues would cost it an extra £10 to £15 million in the year to March 2008.

It also expected to have to spend an extra £10 to £15 million on start-up costs for its Virgin Mobile France joint venture.

"Customer service costs in the TalkTalk Free Broadband business will continue to run ahead of the original business plan for much of the coming year... we expect additional customer service costs of 10-15 million pounds," the firm said.

"We plan to invest further in brand development and customer recruitment in our Virgin Mobile France joint venture. Overall, we expect to invest an incremental 10-15 million of start-up costs," it added.

Shares in the firm, which have fallen around 15 per cent in the last three months as analysts have begun to doubt the firm's broadband profit predictions, dropped 1.4 per cent in early trading to stand at 273 pence by 0821 GMT.

The London-based firm said profit for 2007 would be in line with market expectations, but analysts lowered their profit forecasts following the news about the internet troubles.

"FY08 is likely to come down from 267 million pounds to around 230-235 million to reflect the additional broadband costs and an extra 10-15 million investment in growth opportunities in the US and Virgin Mobile France," said analysts at Numis.

The firm has helped kickstart an intense price war between telecoms players in the broadband market with its much-hyped move into internet provision, but the service has been plagued with technical, customer service and logistical problems.

Customers have complained of waiting months to be connected to the Internet, having to spend hours on customer service lines, and connections regularly failing once they have been connected.

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