The countdown to a £400 million sale of Pipex, Britain’s fifth biggest internet service provider, kicked off yesterday when its chairman launched a review of the business.

Peter Dubens, the internet millionaire, told The Times that he was “reviewing the best way forward” for the business.

Pipex, one of Britain’s first internet service providers, is thought to have held talks with BT last year.

It is also regarded as a likely target for players including BSkyB and Carphone Warehouse, Europe’s biggest mobile phone retailer, as they seek to scale up their broadband customer bases.

However, Mr Dubens said that Pipex, which will today publish a full-year trading update, is not in talks with anyone at present.

City sources believe that Pipex, whose brands include Freedom 2 Surf, may look to divest of parts of the business, such as its internet hosting division, making it easier for interested parties to snap up its consumer and small business broadband customer base.

Analysts say the group as a whole could fetch up to £400 million.

The Pipex business, which last year generated revenues of £133 million, includes hosting and network services. The group also holds a nationwide licence for wi-max, the fast wireless broadband service, in a venture with Intel.

In a recent note, Dan Gardiner, an analyst at Bridgewell, said that the “biggest issue facing a potential acquirer is the structure of the group’’.

Along with Tiscali, Pipex has long been regarded as a takeover target for bigger rivals seeking to build their customer base in an ever more fierce broadband marketplace.

In the past year Carphone, BSkyB and Orange have all launched “free” broadband offerings and there are now about 200 internet providers battling for business.

Pipex now has more than 570, 000 customers for its broadband service.

That number is not expected to be updated today as the group is still digesting the Bulldog customer base that it acquired from Cable & Wireless.

Analysts believe that the group may prefer a sale over continued investment in areas such as advertising. Pipex has just signed up David Hasselhoff, the former Knight Rider adventure series actor, to front a campaign aimed at increasing its brand recognition.

Mr Gardiner highlighted in his note that supporting its position in the consumer market is becoming increasingly costly for Pipex.

The competition in broadband has already forced several players out of the market.

Last year the UK arm of AOL was snapped up for £370 million by Carphone Warehouse. In September Pipex, which has been amassed from the acquisition of about 14 businesses, bought Cable & Wireless’s Bulldog customer base for £12 million.

The Spanish-owned mobile player O2 marked its move into “converged” services with the acquisition of Be, a small broadband provider, for £50 million.

Industry experts believe thatthe market will eventually be whittled down to three or four major players, including BT.

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