Carphone buys AOL UK

The Carphone Warehouse has won an auction by Time Warner, beating off bids from Orange and BskyB, and has bought AOL’s UK internet business for £370m, making it the country’s third largest internet service provider.

Under the agreement, Carphone Warehouse will get AOL’s Internet access customer base in the UK as well as the supporting management and infrastructure. AOL will provide co-branded portal, content and other audience services and will manage the online advertising sales for TalkTalk through a revenue-sharing agreement.

TalkTalk has been a victim of it’s own success. The take up for free broadband has been so much that it has cost CPW £70m, £20m more than budgeted, since it’s launch in April, and customers are waiting for months at a time to get connected.

Charles Dunstone, CEO of Carphone Warehouse, said:

"The acquisition of AOL’s UK Internet access business is transformational for our broadband business. This deal gives us significant scale to complement the rapid organic growth of our free broadband proposition. In addition, the joint development of AOL’s already successful audience platform will bring us new advertising and content revenues in a proven and low risk manner."

The acquisition of the Access business will give Carphone Warehouse a total broadband customer base of  2.1m customers, making it the third largest broadband provider in the UK.

The UK’s largest residential internet provider is currently NTL, which has 2.9 million home customers, followed by BT on 2.2 million.

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