Acquisition

Carphone Warehouse Group PLC
11 October 2006



Wednesday 11 October 2006



For immediate release



The Carphone Warehouse Group PLC ('Carphone Warehouse')



Carphone Warehouse to acquire Time Warner's AOL Internet access business in the
UK for £370 million



AOL to provide co-branded audience services and manage online advertising sales
for combined customer base through a revenue-sharing agreement



Carphone Warehouse and Time Warner Inc. (NYSE: TWX) have reached agreement for
Carphone Warehouse to acquire AOL's Internet access business in the UK for a
cash consideration of £370m ($688m) funded via an extension of existing debt
facilities.  Completion is subject to EU competition authority clearance and is
expected to take place by 31 December 2006.



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.



About AOL in the UK

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.



In the year to December 2005, the assets to be acquired generated revenues of
£442.1m and an operating profit of £14.1m.  Gross assets at December 2005 were
£77.9m.



Rationale for the transaction

Since 2003, Carphone Warehouse has been building a significant presence in the
UK residential telecoms market.  Through organic growth and acquisition, it has
grown to a base of 2.7m voice customers in under four years, giving it
approximately 11% of the residential calls market.  In April 2006, Carphone
Warehouse launched a major new initiative, offering free broadband to its voice
customers, and has attracted 625,000 applications for this service over the last
six months.



The acquisition of the Access business will give Carphone Warehouse an enlarged
broadband customer base of approximately 2m customers, making it the third
largest broadband provider in the UK.  Over time, the additional scale is likely
to create significant operating efficiencies in relation to network
infrastructure and marketing costs.



In addition, the commercial agreement in relation to the Audience business
provides Carphone Warehouse with a ready-made platform via which it can generate
material incremental value from its large and growing customer base.  The
management time and investment cost involved in replicating the Audience
business model would be significant, so the structure of the deal allows
Carphone Warehouse to accelerate its plans without the requirement to build
further internal resource.



For Time Warner and AOL, this transaction marks an important step in positioning
AOL's audience business to take further advantage of the rapid growth in online
advertising - in keeping with AOL's overall worldwide strategy.  In addition to
exiting its Internet access businesses in Germany, France and the UK, AOL will
now have a stronger platform for providing portal, content and other audience
services, on a stand-alone as well as a co-branded basis, and managing online
advertising sales.



Financial impact

The total cash consideration is £370m, of which £250m will be paid on completion
and the balance paid in three instalments over the following 18 months.  The
consideration is being funded by an extension of existing bank facilities.



The transaction is due to complete by 31 December 2006 and is subject to EU
competition authority clearance.  At this stage it is anticipated that the
acquisition will increase current year pre-tax profits by approximately £10m
(subject to completion by 31 December 2006), and next year's pre-tax profits by
£30-40m.



Commenting on the acquisition, Charles Dunstone, CEO of Carphone Warehouse,
said:



'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.'



Dick Parsons, Chairman and CEO of Time Warner, said:



'This agreement completes the restructuring of our AOL Europe businesses that
both advances AOL's strategic transition to an advertising-supported business
model and underscores Time Warner's commitment to shaping its portfolio of
assets to drive the greatest growth possible.  On both fronts - as well as
across our company - we're successfully building critical momentum to the
benefit of our shareholders.  As a leading provider of audience services in
Europe, AOL will be better positioned than ever to continue to grow a cohesive
online advertising business across a region that's key to our future progress.'



Jon Miller, Chairman and CEO of AOL LLC, said:



'For a decade, AOL has played an important part in the growth of the online
medium in the UK.  Under the partnership announced today, AOL will expand the
size of its audience in the UK as a Web-services business.  This is an ideal
outcome for AOL, for Time Warner, and the customers we serve.'




For Further Information


Carphone Warehouse
For analyst and institutional enquiries
Roger Taylor                                        07715 170 090
Peregrine Riviere                                   07909 907193


For media enquiries
Vanessa Godsal                                      07947 000 021

Anthony Carlisle                                    07973 611 888
Citigate Dewe Rogerson                              020 7638 9571



AOL Corporate Communications
John Buckley                                        [phone]
Tricia Primrose Wallace                             [phone]
Anne Bentley                                        [phone]



Time Warner Corporate Communications
Edward Adler                                        [phone]
Susan Duffy                                         [phone]


Time Warner Investor Relations
Jim Burtson                                         [phone]
Chris Clipper                                       [phone]
Mark Holmes                                         [phone]






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