TI buys AOL's German broadband arm

Rupert Murdoch’s Time Warner has inked a deal to sell AOL Germany’s internet access business to Telecom Italia (TI) for Eur 675m ($856m) cash.

The deal, which is subject to regulatory approval, will make TI Germany’s second largest provider of broadband with around 3.2 million customers after Deutsche Telekom’s T-Online. It will also increase Telecom Italia’s subscriber figures to more than 9 million across Italy, France and Germany.

Riccardo Ruggiero, chief executive of Telecom Italia, said in a statement: “This acquisition marks a further step in Telecom Italia’s strategy of focusing on broadband services and content delivery at an international level.”

Earlier this year Time Warner said it wanted to get rid of its AOL franchises in the UK, France and Germany and the announcement in August that it planned to cut a quarter of its workforce – around 5,000 jobs – as it restructured its business to draw more advertising revenue.

The deal will see AOL offering its co-branded services on a joint Web portal for Telecom Italia users and will design, host and operate audience services for Telecom Italia customers in Germany.

Ovum’s Dan Bieler said: “AOL Germany will merge with Telecom Italia’s existing German operation, Hansenet, which operates on a nationwide basis under the ‘Alice’ brand… The move could of course be the preparation for a more convergent positioning of Hansenet, including the development of a triple or quadruple-play offering. In this sense, the acquisition would overlap with Telecom Italia’s reorientation. However, at this point, the exact strategy for Telecom Italia’s European broadband activities remains unclear, especially given the abrupt departure of Telecom Italia’s Chairman Marco Tronchetti Provera last Friday.”