Carphone completes AOL UK acquisition
Carphone Warehouse today said it had completed the acquisition of the UK’s third largest internet provider, AOL UK.
The £370m (€549m) deal, which was first announced in October, gives Carphone just under a fifth of the UK broadband market with an estimated two million customers. Completion had been subject to EU competition authority clearance.
The move marked a significant step for the mobile phone retailer which has been pushing broadband heavily after becoming one of the first firms to offer combined high-speed internet and telephone services under the Talk Talk brand.
AOL is one of the longest-running providers of the internet in the UK. It was launched in the UK in 1996 – before Freeserve – and gave many British homes their first taste of the internet.
The deal will see Carphone acquire 2.1 million internet users, including 1.5 million on broadband to add to its own Talk Talk customers. AOL will continue to provide content on the web and manage online advertising.
It is expected that the acquisition will increase current year pre-tax profits by approximately £10m (€14.8m) and next year’s pre-tax profits by up to £40m (€59m).
Current AOL customers will be able to maintain their present contract or join the Talk Talk service, while new customers could opt for either.
Carphone is expected to achieve cost savings from the deal through a focus on network infrastructure and marketing.
The company will provide further details on its performance, including customer numbers following the AOL deal, when it issues a third quarter trading update on January 12.
In April it sparked a price war when it launched a “free” broadband offer to its Talk Talk customers paying £20 a month for a landline phone.
But the offer was plagued by huge delays as Carphone struggled to keep up with “unprecedented” levels of demand. By September 30, 625,000 customers had signed up for free broadband although 78,000 then cancelled their applications as the problems escalated.
