Carphone Warehouse has bought up AOL UK for £370m in cash, instantly bumping up its broadband customer base by 1.5 million.

The phone company will put £250m down with the rest to be paid on an installment plan over 18 months. Last month, the Times reported that BSkyB and Carphone Warehouse were battling it out for AOL UK, and now it seems that Carphone has won out and got itself over two million new subscribers, even if 600K of them are still using dial-up connections.

Assuming the deal gets regulatory approval it should be all completed by the end of the year, making Carphone Warehouse the third largest broadband provider in the UK, after NTL and BT.

Since offering its "free" broadband service, Carphone Warehouse has had 625,000 applications, and now has 421,000 connected subscribers, but this acquisition ups the ante considerably.

Equally interesting is a commercial agreement with AOL in relation to "the Audience business" which "provides Carphone Warehouse with a ready-made platform via which it can generate material incremental value from its large and growing customer base". So this deal isn't just about getting more customers, but about making some money from those customers too. ®