AOL UK sold at knock down price

Earlier this summer AOL put it UK arm up for sale with the reported price tag of $1.86 billion. With a claim of 2.2 million customers in the UK that put the price at a very high $845 per customer. Not surprisingly, whilst some came to look, nobody wanted to buy at that price. One of the stronger players, BSkyB ended up buying Easynet for $373 million.

So it came as no surprise that AOL has finally managed to offload its UK arm, but at a third of the original hoped for amount. Yesterday, Carphone Warehouse announced that it was buying AOL UK for $688 million. The deal, which still needs to be ratified by the EU competition authority, will add AOL’s 2.2 million customers to Carphone Warehouse’s established base of 421,000 customers.

In recent months Carphone Warehouse has come under heavy critisism from customers unhappy with its poor customer support and waiting lists of almost 4 months in many cases for it broadband offerings.

In August, AOL announced it would begin the sale of its European branches. AOL France was sold to the French fixed-line operator Neuf Cegetel for $365 million in September.
 
In September, Telecom Italia, an Italian mobile, fixed-line, and IPTV communications company, bought AOL Germany for $856 million. The U.K. is the last branch to be sold.

The deal in the UK will further strengthen Carphone Warehouse’s share in the fixed market – it is already a dominant force in the mobile retail market.

The deal looks good for Carphone Warehouse as the knock down price gives it scale and leverage in a market that is rapidly consolidating. In one mighty leap it seems that Carphone Warehouse has firmly placed itself as one of the biggest players in the booming UK broadband market. Expect media deals to follow in the near future.