The company came under renewed fire last night from the BBC consumer affairs programme Watchdog for problems in connecting some of the 500,000 customers who signed up for the offer since its launch in April.
A spokesman told Retail Week: 'Damage was done [to our reputation] over the summer. It'll be a while before the feel-good factor returns. It will come back though.'
The spokesman said that the company had taken action after being inundated with complaints from irate customers who had not been connected to the broadband service, despite signing up to make their fixed-line telephone calls through Talk Talk.
He said that customers were now being connected to broadband 'within four to six weeks' and that call centres were now answering taking calls within 'an average of 55 seconds'.
'We've already turned the corner. Changes that we've made have already started to take effect,' the spokesman added.
In an interview with Watchdog, Carphone Warehouse chief executive Charles Dunstone said: 'I got it wrong. I didn't realise that free broadband was going to have the effect on people it has.'
He added that he was disappointed that so many people had complained to the programme and that the company had apologised to the people involved in all of the cases that Watchdog featured.
It has also emerged that Carphone Warehouse's French subsidiary, The Phone House, has agreed to buy 21 city-centre stores from French retailer PPR for an undisclosed sum, according to reports.
Sixteen of the Fnac Service shops - which specialise in photography - are in Paris and the surrounding area.
The Phone House, which will launch a broadband service later this month, already has 242 French stores and plans to increased this to 300 by the end of this year.