Under the terms of the deal, Neuf Cegetel is to purchase Time Warner’s AOL unit in France for 288m euros ($368m) in cash. The acquisition of AOL’s French internet access business, includes 500,000 broadband customers, and its AMSE operation, which manages AOL France’s customer service operations. This means that Neuf Cegetel will now have 2 million ADSL subscribers.
As part of the deal, AOL will provide audience services and manage the online advertising sales for Neuf Cegetel’s internet portal audience. In addition to the internet access business and AMSE, Neuf Cegetel has made a commitment to hire up to 140 AOL France employees, who will fill open positions within its group.
The deal is subject to approval from the French competition authorities.
Neuf Cegetel actually already provides most of AOL’s DSL links on a wholesale basis, and the deal makes sense as it should also it to improve both revenues and margins.
AOL LLC had 5.9 million customers in Europe, including 2.2 million in the UK, which is by far its largest European market. There is also a small operation in Spain. The mainland European operations however are moving away from an ISP model to a portal-based business, similar to the United States.
Earlier this year, reports emerged that Time Warner Inc, the owner of AOL, had undertook a strategic review of its European business. It was thought this strategic review was similar to the review carried out last year for the US operation of AOL. That review led to the announcement in December by search engine Google Inc which said it would pay Time Warner $1bn for a 5% stake in America Online Inc.
The review was prompted by Time Warner’s then strategy to appease shareholders concerned with what they saw as an AOL drag factor on the overall Time Warner business.
Telecom Italia SpA recently paid 675m euros ($870m) cash for Time Warner’s AOL Germany internet access business.
