Carphone Warehouse saw its shares fall seven per cent in early trading after the TalkTalk operator reported fewer than expected broadband connections and revealed a substantial spending programme.

The company’s internet customers increased to 2.7 million after 109,000 broadband additions in the three months to the end of March.

But this was fewer than the previous quarter when Carphone Warehouse added 118,000 and short of analysts’ expectations of 128,000. This year Carphone Warehouse expects to add another 400,000 broadband customers, with the aim of having 3.5 million by March 2010.

Its shares fell to 248p just after the announcement.

Mobile phone business was brisker in the first quarter and the fixed line and mobile operator saw a 12 per cent rise in mobile connections. Overall, it said that profits remained on course for between £215 million and £220 million for the year ending March. However, that fell slightly short of analysts’ expectations of between £220 million and £225 million.

The company also revealed that it has suffered adverse currency movements of £120 million since the end of December with the weakening of sterling against European currencies.

Charles Dunstone, chief executive, said: “Our performance over the last three months has been good in a slower consumer environment.”

Carphone Warehouse is to expand its high street presence but said: “the rate of physical expansion will be more measured this year, reflecting our objective of focusing on operational improvements, and the softer economic environment.” But the company insisted that the longer term opportunities for expansion “remain as attractive as ever”. This year it plans 120 net new store openings and 200 re-sites and major re-fits. It is systematically increasing the size of its stores.

The store expansion and re-fit programme will contribute £45 million towards a substantial capital expenditure programme this year. Carphone Warehouse will also spend £85 million on its telecoms network infrastructure; £70 million on IT development and £20 million on other projects.

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