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The ISP, which is owned by the Time Warner media empire, was put up for sale by the company as it seeks to reposition itself away from commodity Internet provision towards a more products and services oriented operation.

AOL UK currently has 1.3 million broadband subscribers and another 1.2 million dialup customers. Bids are expected in the region of £650 million.

According to the report, an executive with links to Orange is quoted

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as saying 'Orange is going to bid very aggressively for AOL UK. France Telecom is terrified of the prospect of BSkyB getting hold of it and putting pressure on its Internet business.'

France Telecom, which owns Orange, recently merged the brand with ISP Wanadoo as it prepares a bundled offering of broadband and mobile phone services.

Both BT and BSkyB have expressed interest in AOL UK although the chances are that the Competition Commission would block a bid from BT.

BSkyB is preparing a major push in the UK market for its own triple play of satellite TV, broadband access and telephony later this summer. Last year, BSkyB bought Easynet for £211 million. It is now thought that BSkyB is preparing a 'free' broadband service to rival that launched by Carphone Warehouse earlier this year, and that BSkyB will reveal the details of its long-term broadband Internet strategy on 18 July.