British telecoms group Carphone Warehouse has agreed to buy AOL UK, a division of Time Warner's struggling internet arm AOL, for £370m. The deal is subject to approval by the EU's competition authorities.
The deal will give Carphone around two million broadband customers and make it the third largest provider of high-speed internet in the UK.
It came as the mobile phone retailer revealed losses from offering 'free' broadband to 625,000 of its Talk Talk customers would hit £70m this year. Carphone was one of the first operators in the UK telecoms market to offer customers combined internet and telephone services.
The deal with Time Warner for AOL will see Carphone acquire 2.1 million internet users, including 1.5 million on broadband, to add to its own Talk Talk customers. AOL is one of the longest-running providers of the internet in the UK.
Carphone's TalkTalk broadband deal - which offers customers 'free' broadband if they pay £20 a month for a landline phone - has been plagued by problems since its launch in April as Carphone struggled to keep up with demand. It originally thought the offer would create start-up costs of £50m this year, but those estimates were widened by £20m today.
