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Carphone Warehouse Buys AOL & Issues User Stats

Posted: 11th Oct, 2006 By: MarkJ
The Carphone Warehouse (TalkTalk) has today issued its latest second quarter trading update and confirmed the purchase of ISP AOL UK for £370 million. Reportedly TalkTalk's "free" broadband offer has so far raked in 625,000 subscribers, with 421,000 of those now being live:

It doesn't take a mathematical genius to work out that this means 204,000 are still stuck waiting for a connection. Meanwhile 370 exchanges have been unbundled from BT, with a further 476 handed over by Openreach:

20,000 broadband customers were on unbundled lines at the period end. Over the next three months we will start to use Openreach's bulk migration platform to transfer customers onto unbundled lines in significant volumes. We will update the market on progress at our interim results presentation on 2 November 2006.

We have made significant progress in relation to customer service levels over the last two months. Customers are now going live on broadband typically within 5 weeks of application, which includes the necessary time for arranging wholesale line rental, carrier pre-select and IP Stream transfers, and we expect to reduce connection periods further over the coming weeks. In addition, call centre response times have improved materially, with independent market research now indicating that waiting times are now among the lowest in the industry. We will continue to invest to make TalkTalk's customer service a positive differentiator.

Meanwhile and much as has been predicted over the past couple of months, Carphone has finally swallowed up one of the UK's biggest ISPs, AOL. The deal itself still has to be agreed by the EU, which shouldn't be too much of a problem and will complete towards the end of this year:

Under the agreement, Carphone Warehouse will acquire AOL's Internet access customer base in the UK as well as the supporting management and infrastructure (the “Access” business). For its part, AOL will provide co-branded portal, content and other audience services and will manage the online advertising sales for Carphone Warehouse's combined broadband customer base through a revenue-sharing agreement.

AOL is one of the largest Internet service providers in the UK , with approximately 2.1m ISP customers. On completion, it is anticipated that this will comprise 1.5m broadband customers and 0.6m dial-up customers.

“The acquisition of AOL's UK Internet access business is transformational for our broadband business. This deal gives us significant scale to complement the rapid organic growth of our free broadband proposition. In addition, 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.”

Carphone are still hoping to have 1,000 unbundled exchanges by May 2007 and it looks like that target will be met, putting them into aggressive competition with BT's own network.
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