Carphone Warehouse, which yesterday announced plans to offer British customers free broadband internet connections as part of a phone package, said it was considering how to move into the broadband market in Ireland.

Stephen Mackarel, chief executive of the phone retailer's Irish division, said the business in the Republic was performing very well and was in line with trading across Europe.

The group doesn't break out figures for individual regions, but said yesterday that full-year results would be in line with forecasts. Analysts are forecasting pretax profits of £135 million (€195 million).

Mr Mackarel said the company, whose current focus is selling mobile phones, was considering the best way to offer broadband in the Republic. "We will be doing broadband in some way, but have not made a decision yet," he said. "It is definitely a product you will see from us."

During the past year, London-listed Carphone Warehouse has opened 12 new outlets in the Republic, bringing its retail chain to 46. It plans to open another 10 in the coming year.

According to Mr Mackarel, one in every five phones in the Republic is bought through Carphone Warehouse, a number he aims to increase to one in four. As the only high street retailer to sell phones from all operators, the group is benefiting from increased competition in the Irish mobile market.

The company said yesterday mobile connections were up 32.8 per cent in the fourth quarter to 2.23 million, while higher margin contract subscriptions increased 22.4 per cent to 890,000.

The parent group's chief financial officer Roger Taylor said the company believed it could turn a £40 million profit in 2008.

"It's all in the unbundling of exchanges. If you unbundle the exchanges effectively and efficiently, the cost of delivering that service is nothing like what people imagine."