British incumbent, BT announced Thursday it is to buy PlusNet for £67m in cash to strengthen its position for broadband services.

Last month, retailer Carphone Warehouse agreed to buy Time Warner’s AOL internet access business in the UK for £370m.

BT said last week its share of new broadband customers had slipped to 22% during the second quarter of its financial year from 25% in the previous quarter. The revelation sparked fears that BT was losing out to its so-called ‘Free’ competitors.

The company said it would pay 210p a share for PlusNet, a premium of 17pc to its closing price on October 11. PlusNet has around 200,000 broadband customers and BT said that under the deal it would retain its brand.

In the year ended June 30, PlusNet had revenues of £41m and net income of £3.9m.