THE mobile-phone retailer Carphone Warehouse is this week expected to announce a plan to invest millions of pounds on installing broadband internet equipment in BT’s exchanges.

This would demonstrate a big acceleration of Carphone’s move into broadband. By installing its own equipment — a process that is referred to as local-loop unbundling (LLU) — the company will have more control over the services and prices it offers its customers.

It will also continue Carphone’s rapid transformation into a significant provider of telecoms services.

Since it launched its TalkTalk arm in February 2003, Carphone Warehouse has acquired more than 1m telephony customers by undercutting BT’s prices.

It has just launched TalkTalk Mobile, which offers subscribers unlimited free calls to and from TalkTalk landlines.

So far, Carphone has signed up about 70,000 broadband customers by reselling BT’s wholesale product. An investment in LLU could offer better margins.

In a note, Christian Maher, telecoms analyst with Investec Securities, said: “Carphone Warehouse is not currently a major player (in broadband) but the opportunity is there for the company to drive massive growth over the next 24 months.”

More than 8m Britons already have broadband internet access, a market that is led by the likes of BT, NTL, AOL, Wanadoo and Tiscali.

More customers are expected to upgrade their connections as television over broadband becomes a reality in the next few years. Last week BT announced its plans for internet television.

The broadband market is becoming as ferociously competitive as that for voice telephony.

However, its broadband market rivals acknowledge that Carphone’s strong brand and chain of more than 500 UK stores give it an advantage in distribution.

At the same time, several discount-telephony providers are looking for exits from the market.

Centrica has put One-Tel up for sale, Tele2 is looking at pulling out of the UK after only two loss-making years, and there are doubts about the future of Caudwell Group, owner of Phones 4U and its Homecall service.

Charles Dunstone, the chief executive at Carphone, is seen by some as a likely buyer, but he is keen to talk down the prices. Any hopes that Centrica might get £350m or more for One-Tel was “absolute madness”, he said.

Investec expects Carphone to report half-year pre-tax profits on Thursday of £35.8m, a 35% improvement on last year.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts