Internet provider and webportal operator AOL is preparing to lay off 5,000 workers.

The restructuring is part of a plan to increase the firm's advertising revenue and compensate for a drop in subscription fees for its internet provider business.

AOL on Wednesday had said that it would stop charging fees to customers of competing broadband services. The decision was an attempt to reduce the number of former AOL users defecting to email services from Google, Yahoo! or Microsoft.

For the past few months the provider has been trying to sell its European sister organisations that have about 5.9m customers.

Both Sky and BT have been singled out as potential suitors for AOL UK. Contenders for the provider's German branch are said to include KNP, Versatel (both of the Netherlands), Freenet.de, German online provider United Internet or Telecom Italia. The latter is also reported to have put in a bid for the French division.