Carphone Warehouse has announced that it is to acquire AOL UK for £370 million.
Under the agreement, Carphone Warehouse will acquire AOL’s customer base in the UK as well as the supporting management and infrastructure, whilst AOL will provide co-branded portal, content and other audience services and will manage the online advertising sales for Carphone Warehouse’s combined broadband customer base through a revenue-sharing agreement.
There had been speculation that BSkyB or Orange would win the race to buy AOL UK (see Orange And BSkyB In Battle Over AOL UK).
In a statement released today Carphone Warehouse said AOL UK has approximately 2.1 million ISP customers. On completion, it is anticipated that this will comprise 1.5 million broadband customers and 0.6 million dial-up customers.
In the year to December 2005, AOL UK generated revenues of £442.1 million and an operating profit of £14.1 million.
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.”
Dick Parsons, chairman and CEO of Time Warner, said: “This agreement completes the restructuring of our AOL Europe businesses that both advances AOL’s strategic transition to an advertising-supported business model and underscores Time Warner’s commitment to shaping its portfolio of assets to drive the greatest growth possible.
“On both fronts, as well as across our company, we’re successfully building critical momentum to the benefit of our shareholders. As a leading provider of audience services in Europe , AOL will be better positioned than ever to continue to grow a cohesive online advertising business across a region that’s key to our future progress.”
Jon Miller, Chairman and CEO of AOL LLC, said: “For a decade, AOL has played an important part in the growth of the online medium in the UK. Under the partnership announced today, AOL will expand the size of its audience in the UK as a Web-services business. This is an ideal outcome for AOL, for Time Warner, and the customers we serve.”
Also today, Carphone Warehouse announced its second quarter results which revealed that the high demand for its “free” broadband service has increased the losses it expects to make for the year (see Increased Broadband Costs For Carphone Warehouse).
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