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Time Warner is to sell its German subsidiary AOL Deutschland, according to financial news agency DPA.

Time Warner recently hired Citigroup to explore the sale or restructuring of its entire AOL Europe unit, which also includes the CompuServe brand. The investment of a new partner is also a feasible option, according to sources.

The German subsidiary is by far AOL's biggest: it boasts over one million DSL users, but lacks investment to compete with its major rival Deutsche Telekom.

Overall, AOL Europe has six million users, but its subscription base has been steadily declining. Last year, 287,000 European AOL online users migrated to other service providers. However, AOL Germany is still worth €450m and AOL Europe in general saw its income from online advertising rise 35 per cent in Q1.

Until 2002, German publishing house Bertelsmann owned 49 per cent of AOL Europe, and American Online is now looking for a new partner. Potential candidates include Spanish telecommunications group Telefonica and Vodafone subsidiary Arcor, according to sources.

In the US, AOL has announced another 1,200 layoffs, or seven percent of its total workforce worldwide. Time Warner's internet unit cut 700 jobs last fall. In the US, more and more internet users are dropping dial-up connections in favour of broadband, an area AOL has ignored for too long. ®

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