TW Inks Deal with Telecom Italia for German AOL

18 September 2006

NEW YORK: Media giant Time Warner has agreed to sell its German AOL internet access business to Telecom Italia in a deal worth €675 million ($855m; £454m).

The company is also in talks over the sales of its British and French web divisions [WARC News: 05-Jun-06] and expects to pocket around $2 billion when all three have been successfully negotiated.

The disposal of its profitable European franchises is part of a broader TW strategy shift aimed at increasing AOL's user numbers and advertising income by ditching monthly fees for internet access.

Most of the revenue generated by the European operations comes from selling monthly subscriptions, but the company says advertising has been growing. AOL Europe generated about €100 million in operating profit last year.

Following the deal, Telecom Italia will be Germany's second-largest broadband provider, with more than 3.2 million total subscribers including nearly two million broadband customers.

Data sourced from Wall Street Journal Online; additional content by WARC staff