Telecom Italia / AOL Germany

Telecom Italia, a listed Italian broadband internet company, and Time Warner announced that Telecom Italia agreed to acquire Time Warner's AOL Germany internet access business. The price is EUR 675m (USD 870m equity value) in cash.

The companies expect to close the transaction in four to six months, after receiving the customary regulatory approvals. Telecom Italia is moving to consolidate its presence in Germany, which started with its acquisition of Hansenet in 2003 and expanded with its organic growth. Once its acquisition of AOL Germany's internet access business closes, Telecom Italia will be Germany's second-largest broadband provider - with more than 3.2 million total subscribers, including nearly 2 million broadband customers.

Telecom Italia has a presence in Italy, France, Germany and the Netherlands. With its pending acquisition of AOL Germany's internet access business, Telecom Italia will serve approximately 9 million broadband subscribers in Europe. Under a new partnership, AOL will provide co-branded audience services and content on a joint web portal for all of Telecom Italia's residential internet access subscribers in Germany, and will handle all online advertising sales.

AOL Germany has operated as an ISP for over 10 years and competes in both narrowband and broadband internet access. As of June 2006, AOL Germany, ranked second and third among German narrowband and broadband access providers, had 1.1 million broadband subscribers and approximately 1.3 million narrowband subscribers.

Under the terms of the five-year partnership, AOL will design, host and operate audience services for Telecom Italia's entire residential internet access customer base in Germany. AOL will be responsible for all online advertising sales for the co-branded audience services. The financial terms of the audience services partnership were not disclosed.

Time Warner Inc. is a New York media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing. AOL is a Virginia-based majority-owned subsidiary of Time Warner.

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