The Carphone Warehouse has become the third largest broadband provider in the UK, behind BT and Virgin Media, thanks to an extra 126,000 customers added in the first quarter.

But just 40 per cent of its 2.4 million customers are accessing the internet via its own telecommunications network, with the remaining 60 per cent obtaining the broadband service via wholesale products supplied by BT.

The company makes a loss on such customers, but chief executive Charles Dunstone says he is satisfied with the migration rate of 20,000 customers a week during the first quarter to its own network.

The outlook for the future is good, says Dunstone, with overall revenue up 21.7 per cent and retail sales increasing 13 per cent to £445m.

‘Customer demand for both broadband and wireless solutions for the home is still increasing,’ said Dunstone. ‘With the further enhancements to our broadband services that we are planning over the coming months we are excited about the future.

‘Our broadband operations are making good progress, with the levels of sales and migrations giving excellent visibility of future profitability.’

Mobile phone sales also rose 9.1 per cent to £129m.