UK Broadband ISP Merger News 1: Carphone seals AOL deal

UK mobile retailer and broadband provider Carphone Warehouse has agreed to purchase the UK operations of Time Warner’s ISP AOL for GBP370 million (USD689 million), the company said in a statement. Carphone will acquire AOL UK's customer base as well as supporting management and infrastructure. AOL put its European ISP businesses in the UK, Germany and France up for sale earlier this year, and said it expected to reach deals on all three by the autumn. Last month it agreed to sell its French and German businesses to neuf Cegetel and Telecom Italia for USD365 million and USD854.7 million respectively. That month Carphone and pay-TV giant BSkyB emerged as the frontrunners to purchase AOL UK, after Orange pulled out of the bidding. AOL UK is the country’s third largest broadband provider by subscribers, with around 1.3 million ADSL customers and an 11% share of the market at mid-2006. The deal will see Carphone’s UK broadband customer base boosted to more than 1.6 million, but will stretch the company’s funding to the limit. Earlier this week it revealed that the launch of its own unbundled local loop (ULL) broadband service was likely to result in a larger than expected operating loss of GBP70 million in fiscal 2006/07, and it will have to fund the AOL UK acquisition via an extension of existing debt facilities.