Reuters has reported that the independent mobile retailer with a growing suite of telecoms services has become a formidable force in the UK's fixed-line phone market, and announced its intention to target the market for high-speed Web connections last November.
"We think free broadband is on the way, pioneered by Carphone," Merrill Lynch analysts said in a research note to Reuters last week.
One investor said the company was likely to announce plans to offer free broadband to UK homes, which would help it quickly gain a critical mass of customers and mount a serious challenge to market leader BT and other rivals.
Existing broadband offers in the UK cost around 17.99 pounds a month and analysts say CPW, which has announced plans to install equipment in some 1,000 telephone exchanges by 2008 to cut its dependence on former monopoly BT, could bundle these services, offering just one bill to customers and potentially sharply cutting their cost.
"We believe that Carphone could break even at exchange level with an ARPU (average revenue per user) of just 12 pounds (a month). Its shared access rivals currently enjoy ARPU of 30-40 pounds," Merrill said.
Broadband is set to be the platform for a variety of communications and entertainment services, spanning a range of consumer devices from phones to computers to televisions.