11 October 2006 | Author: Yasmin Sulaiman
The deal, while still awaiting regulatory approval, is set to make Carphone Warehouse the third biggest broadband provider in the UK - coming in after NTL and BT. As part of the all cash transaction, Carphone Warehouse will put £250m down, with the rest paid through an instalment plan over the next 18 months. The deal is set to boost the phone retailer's pre-tax earnings by £10m in the current fiscal year, and by a further £30-40m next year.
Carphone Warehouse first began its free Talk Talk broadband service in April of this year, and currently has 421, 000 subscribers. By buying AOL UK, its total customer base will now exceed 2 million - though 600, 000 of these customers still use dial-up connection. Under the deal, AOL will retain its name as well as the US firm's policy of charging its customers. It will also keep AOL UK's existing management and infrastructure.
In September, The Times reported that BSkyB and Carphone Warehouse were involved in a battle over AOL UK. News of Carphone Warehouse's prospective takeover of AOL UK came after the UK retailer said that a strong demand for its Talk Talk broadband service was costing £20m more than previously expected, and that it was having trouble dealing with "unprecedented" consumer reaction.
Carphone Warehouse chief Charles Dunstone commented:
"This deal gives us significant scale to complement the rapid organic growth of our free broadband proposition."
He also added: "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."
News of the takeover saw Carphone Warehouse's shares rise by 5% during morning trading in London.
Carphone Warehouse buys AOL UK for £370m in cash
What started as an ordinary week in October has suddenly been transformed by a series of scintillating news stories. Hot on the heels of Google's dramatic takeover of YouTube comes the announcement that Carphone Warehouse, one of the UK's leading mobile phone retail outlets, has bought leading internet provider AOL UK for £370m in cash - instantly expanding its broadband customer base by 1.5 million. The deal, while still awaiting regulatory approval, is set to make Carphone Warehouse the third biggest broadband provider in the UK - coming in after NTL and BT. As part of the all cash transaction, Carphone Warehouse will put £250m down, with the rest paid through an instalment plan over the next 18 months. The deal is set to boost the phone retailer's pre-tax earnings by £10m in the current fiscal year, and by a further £30-40m next year.Carphone Warehouse first began its free Talk Talk broadband service in April of this year, and currently has 421, 000 subscribers. By buying AOL UK, its total customer base will now exceed 2 million - though 600, 000 of these customers still use dial-up connection. Under the deal, AOL will retain its name as well as the US firm's policy of charging its customers. It will also keep AOL UK's existing management and infrastructure.
In September, The Times reported that BSkyB and Carphone Warehouse were involved in a battle over AOL UK. News of Carphone Warehouse's prospective takeover of AOL UK came after the UK retailer said that a strong demand for its Talk Talk broadband service was costing £20m more than previously expected, and that it was having trouble dealing with "unprecedented" consumer reaction.
Carphone Warehouse chief Charles Dunstone commented:
"This deal gives us significant scale to complement the rapid organic growth of our free broadband proposition."
He also added: "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."
News of the takeover saw Carphone Warehouse's shares rise by 5% during morning trading in London.
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