Carphone Warehouse has increased its broadband customer base to over 2.7 million users and connected 12% more mobile phone customers in Q3.

Analysts were unimpressed with the growth and rising debt, triggering a 10% drop in the share price to 239p.

The business added 109,000 new broadband users, but analysts wanted to see 128,000 additional subscribers. The cost of acquiring new customers has gone up, due to laptops being given away to customers signing up to Carphone Warehouse's AOL broadband service. Mobile phone connections have been driven by a higher-than-expected take-up by pre-pay customers.

Carphone Warehouse has downgraded pre-tax profit estimates for 2008 by 2% to £215-220 million, but the outlook is more confident. 'Targeted 10-12% revenue growth in distribution in 2009 is well above forecasts,' said Investec analyst Jonathan Groocock..

The company's Best Buy US joint venture will add £25-35 million to profits by 2011, added Groocock, ahead of Investec's £10 million forecast.

Net debt is £50 million higher because of capital expenditure and £120 million on currency movements, notably higher interest costs on euro-dominated borrowings.

Carphone Warehouse is targeting 4-5% growth of fixed-line telecoms with 22-23% EBITDA margins.

Stockbroker Landsbanki doesn't like the outlook for 2009, saying it appears 'weak'. 'The company is expecting 400,000 customer additions in the broadband business and is retaining its 3.5 million target by 2010 but indicate that growth will be second half weighted,' said analyst Dan Gardiner. 'However the capex budget for FY 2009 is significantly ahead of our expectations at £220 million with the company spending an additional £130 milion on subscriber acquisition costs.'