Carphone Warehouse's decision to offer free broadband to customers spending over a specified amount a month of telephone contracts has cost the firm millions.

The interest in the offer has been larger than expected, meaning the company has had to fork out £20 million in extra costs, reports the Scotsman.

Over 625,000 people are said to have signed up for the scheme, leading to the increase of costs from £50 million to £70 million.

Chief executive Charles Dunstone confirmed: "The unprecedented take-up of our free broadband offer means we have accelerated our customer service recruitment plans and incurred additional wholesale broadband costs.

"We now expect to incur start-up broadband losses of around £70m in the current year, compared to our original guidance of £50 million."

Earlier in the month, Carphone Warehouse launched an offer which gives a free laptop to customers who choose one of several broadband packages including from in-house provider Talk Talk.