Carphone Warehouse buys AOL’s UK business for 370m

Carphone Warehouse has won an auction against BSkyB to acquire the UK operation of AOL in a deal worth 370m.

Carphone Warehouse, owner of the Talk Talk broadband and phone service, will acquire AOL’s internet access customer base in the UK, alongside the supporting management and infrastructure of its "Access" business.

AOL UK has 2.1 million customers across the country comprising 600,000 on dial-up connections and 1.5 million with broadband.

The two companies have entered into a revenue-sharing agreement, with AOL responsible for managing the online advertising sales for the combined broadband customer base.

Carphone Warehouse, which is funding the acquisition through an extension of its debt facilities, revealed earlier today that it expected to increase losses by 20m to 70m relating to its free broadband service, which launched in April.

In a trading statement the company says it now has a has a total of 65,000 broadband customers, boosted largely by its broadband deal, which offers customers a free connection if they pay 20 a month for the land-line phone service Talk Talk.

The transaction is due to be complete on 31 December 2006, subject to EU competition authority clearance.