Time Warner Sells AOL UK to Carphone Warehouse

12 October 2006

LONDON: Some regard America Online as bad karma, not least Time Warner's shareholders, still reeling from its disastrous merger with the online albatross in January 2001. Fortunately high profile UK telecoms entrepreneur Charles Dunstone - the new owner of AOL UK - is not superstitious.

TW, which earlier this year put AOL's British unit up for grabs with a Panglossian price tag of around £600 million ($1.1bn; €887.9m), has finally found a buyer for £370m - Dunstone's publicly listed Carphone Warehouse Group which claims to be Europe's largest independent cellphone retailer.

CWG also owns landline telco TalkTalk, which offers a "free" broadband service launched in April with a claimed subscriber base of around 625,000. AOL UK, which has 1.5m broadband subscribers plus 600,000 dial-up dinosaurs, will retain its discrete brand identity and supporting infrastructure.

AOL will also provide a co-branded portal with content and other audience services. Moreover, it will manage online advertising for CWG's entire customer base via a revenue-sharing deal.

Pessimists, however, wonder if Dunstone hasn't bitten off more than CWG can chew? On Wednesday the company admitted that TalkTalk is set to make a £70m loss this year.

Dunstone, however, claims that "underlying performance in the first half has been ahead of our expectations, and we expect interim headline pre-tax profits, before the impact of our broadband and Virgin Mobile France operations, to be up 50% year on year."

Data sourced from MediaGuardian.co.uk; additional content by WARC staff