Carphone Warehouse has announced that it has reached an agreement with Centrica to buy its OneTel unit for £132m, and has also acquired Swedish reseller Tele2 for £8.5m.

The purchases add 1.6 million customers (188,000 from Tele2, 1.41 million from OneTel) to Carphone Warehouse's existing 1.1 million TalkTalk customer base, making it the UK's third largest fixed-line supplier.

Carphone Warehouse chief executive Charles Dunstone explained that the acquisitions are part of his aim to "compete head on" with BT.

Mike Cansfield, research director at analyst firm Ovum, said: "The first point to consider is why Carphone Warehouse is buying two businesses that operate in the declining voice market when all the growth is elsewhere, such as in broadband.

"But in telecoms size matters. Strip out the duplicate management and service overheads and the combined three businesses will be more efficient as one than as separate entities.

"The expectation is that Carphone Warehouse will leverage this investment by upgrading its narrowband voice customers to broadband."