CARPHONE Warehouse today warned that tackling customer service problems at its broadband business would add extra costs of up to £15m.
The company said the costs at its TalkTalk operation were likely to exceed expenses forecast in its business plan for much of the coming financial year.
But it stressed that protecting the brand for the longer term was more important than profitability.
Carphone has been deluged with complaints following "unprecedented" levels of demand for its TalkTalk broadband offer, which provided free high-speed internet to those customers paying £20 a month for a landline phone.
Carphone said that subscription connections rose by 14.0% to 1.02m during the quarter under review while total connections were 8.3% higher at 2.41m.
Chief executive Charles Dunstone said the company was on course to make full-year profits in line with expectations.
But he said Carphone expected to incur additional broadband customer service costs of £10m to £15m on TalkTalk.
That is on top of broadband start-up costs of about £70m in the current financial year, which came to an end this week.
The company said it was confident that by the end of the financial year the increasing scale of its customer base and the ongoing improvement in its processes would result in customer service costs in line with original plans.
Mr Dunstone has already admitted that the offer of free broadband created a customer service "nightmare" for the firm.
Carphone hired hundreds of extra staff as it struggled to cope with the higher than expected levels of demand.
It has also had to pay to use BT products while waiting for its own high-speed internet access into homes to be fitted - a process involving the "unbundling" of BT exchanges.
Mr Dunstone said the company had met its target of unbundling 1,000 exchanges two months ahead of schedule.
The company now has 2.27m "unbundled" broadband customers.