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Carphone Warehouse secures AOL's UK business

11/10/2006

Carphone Warehouse is to pay £370 million for AOL's UK customer base, the telecoms provider has revealed.

This morning's announcement will see AOL, owned by Time Warner, transfer its 2.1 million internet-using customers, together with the management and infrastructure in place for dealing with them, over to Carphone Warehouse by the end of this year.

Provided that competition regulators permit the sale, Carphone Warehouse will gain 1.5 million broadband users and 0.6 million on dial-up.

It will continue the fee-paying arrangement currently operated by AOL, balancing its popular 'free broadband' deal already offered to the 625,000 customers who signed up in the three months to September 30th this year.

"The acquisition of AOL's UK internet access business is transformational for our broadband business," Carphone Warehouse chief executive Charles Dunstone said.

"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 purchase is being funded by an extension of Carphone Warehouse's existing debt facilities, the company said in a statement.

Meanwhile AOL said it would benefit from the deal because it would help the company's transition to the more directly advertising-oriented business model it is currently pursuing.

"Under the partnership announced today, AOL will expand the size of its audience in the UK as a web-services business," Jon Miller, AOL UK chairman and chief executive, said.

"This is an ideal outcome for AOL, for Time Warner, and the customers we serve.'

Carphone Warehouse said that the expanded customer base would make it the UK's third largest broadband provider.

After an early fall shares in the company shot up at 09:00 BST, before increasing overall by 4.35 per cent shortly before 11:00 BST.

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