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[PSUs]| Monday 12th June 2006 |
Reports that the business was up for sale emerged ten days ago and since then various big-name firms have been mentioned as possible buyers, including Carphone Warehouse, Vodafone and Google.
However it appears that the field has narrowed to just two, though both are baulking at the rumoured $1bn asking price. One unnamed executive told the Sunday Times that with 2.2 million UK subscribers, worth at most £300 each to the new owner, the price should be nearer £660mn. And that is likely to be dragged downwards by falling broadband prices - not to
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BSkyB is a relatively new entrant into the broadband market following last year's purchase of Easynet. It is poised to launch a broadband service that will be closely tied to its satellite TV business. BT has seen its share of the UK broadband market eroded by competition but is still the leading retail provider with 2.6 million users and any proposed acquisition of AOL is sure to be queried by the Monopolies and Mergers Commission.
Of the other possible bidders, Google already has a five per cent interest in AOL but this was thought to have more to do with keeping Microsoft's hands off the business than any interest in AOL's declining business. Carphone Warehouse has enough on its hands while Vodafone says AOL does not fit with its strategy for moving into landline-based services.
The Economist speculates that the sale of the UK Internet access business may just be the first stage in a complete liquidation of AOL by its parent company, Time Warner.
'In the end, the interdependence of the access and the advertising sides of AOL may lead Time Warner to sell the whole business,' it said in the 20 May edition.
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