AOL Sells UK Unit

Time Warner has sold AOL’s UK Internet unit in a $688 million cash deal with UK ISP Carphone Warehouse.

The agreement advances AOL’s transition to becoming an
advertising-supported company, according to a statement.

Carphone acquires AOL’s Internet customers in the UK and the ISP’s access
business infrastructure. Along with a co-branded portal, content and other
services, AOL will manage through a revenue-sharing agreement, online
advertising for Carphone’s broadband customers.

The move means AOL will be better positioned to grow its online advertising
business, according to Dick Powers, Time Warner CEO.

AOL’s current 2.1 million UK ISP customers will drop to 1.5 million
broadband users and 600,000 dial-up subscribers. The buy-out is expected to
be finalized Dec. 31, 2006.

For Carphone, the acquisition moves it to the third-largest UK ISP with 2
million customers.

Earlier this year, AOL refused to comment on a report it was looking for a
buyer for the UK unit.

AOL has faced increasing competition from companies
offering free Internet service in the UK

The June report follows an April Carphone initiative offering free
broadband service to its 2.7 million voice customers.

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