Only three European internet portals will manage to compete effectively against the leading US portals such as AOL and Yahoo!, according to a report published yesterday.

The Forrester Research report says that leading British portals such as Freeserve will not survive as independent entities.

It says the European winners will be Telefonica of Spain's Terra Networks, France Telecom's Wanadoo and Deutsche Telekom's T-Online.

The three businesses, all dominant national portals backed by "deep-pocketed" telecom companies, would triumph on a pan-European level.

The next 10 European internet portals, including Freeserve, World Online and CMGI-owned Altavista, will all lose out in the battle for customers and revenue. The report says they suffer from undifferentiated offerings and lack first-mover advantages.

Hellen Omwando, the Forrester analyst who prepared the report, said: "Freeserve is a perfect target for acquisition, possibly by someone like T-Online or Wanadoo."