Failing to compete with France Telecom and Deutsche Telekom

AOL is intending to pull out of France and Germany because it is struggling to compete with France Telecom and Deutsche Telekom, according to industry rumours.

The company is thought to have put its French and German units up for sale already, and will only run an internet portal in those countries.

Sources within the banking industry claim that Citigroup has been appointed to sell the companies, which are thought to be worth £480m.

Time Warner is expected to hold onto its UK AOL business.