Europe's largest internet service provider, T-Online, yesterday underlined the difficulties for access providers by revealing that it had lost 390m euros (£240m) last year.

It blamed the shift towards flat-rate internet access and the write-off costs relating to a series of acquisitions.

The takeovers of Club Internet and Ya.com account for 203m euros of the write-offs, following the fall in value of ISPs since last year's technology stock boom.

Last year it recorded pretax losses before write-offs of only 17.6m euros.

Sales for 2000 almost doubled to 797.2m euros, largely off the back of acquisitions.

T-Online, which is 81.7% owned by Deutsche Telekom, last month tried to reduce its losses by pulling an unlimited internet access package which was sold for $35 (£24) per month. Customers now have to pay that amount to get 90 hours' access a month.

Like many internet service providers T-Online has been able to grow fast and attract millions of users but it has had difficulty making money out of them. It currently has 8.5m customers.

Chief executive Thomas Holtrop has said he aims to generate 30% of revenues from e-commerce and advertising. At the moment only 22% of income comes from sources other than the charges users are levied for logging on.

"After a period of growth, profitability and professionalism are now our focus," he said.

Last year T-Online held takeover talks with Britain's leading ISP, Freeserve, which broke down after the two companies failed to agree on price. Freeserve has since been bought by Wanadoo of France.

Shares in T-Online have suffered in line with the wider internet sector and last week touched an all-time low. Many analysts believe that European ISPs remain overvalued compared to their longer established US competitors.