Time Warner Inc. (NYSE: TWX) has decided to sell AOL U.K.’s Internet access for $688 million to The Carphone Warehouse Group PLC (LON:CPW). The deal will finalize at the end of the year. Carphone Warehouse will absorb AOL’s Internet customer base in the United Kingdom along with AOL U.K.’s infrastructure and supporting management.

Through this agreement, AOL would provide a co-branded AOL/Carphone portal and content. Carphone Warehouse and AOL would share revenue through this agreement as well. Currently AOL has 600,000 dial-up customers and 1.5 million broadband customers in the United Kingdom.

Through this acquisition, Carphone Warehouse’s customer base will increase to 2 million customers and would make it the 3rd largest Internet provider in the United Kingdom. This co-branded partnership between Carphone and AOL will give AOL a stronger platform in providing portal content. AOL has used a similar exit strategy for its Internet access businesses in Germany and France as well.

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