Telecom Italia, the telecoms company considering an asset sale to reduce its debt, has won the €700m ($885m) auction for AOL Germany.
It beat three rival bidders, understood to be United Internet, freenet.de and Versatel to capture AOL and will announce the takeover this week. Deutsche Bank and Dresdner Kleinwort advised Telecom Italia, which has a presence in Germany through Hansanet. Time Warner, which owns AOL, appointed Citigroup this year to sell its European access businesses in a series of auctions. In France, Time Warner has entered into exclusive negotiations to sell its access business to Neuf Cegetel. Several bidders, thought to include Rupert Murdoch's News Corporation, are circling AOL's UK business. The AOL acquisition fits with the strategy of Telecom Italia's chairman and chief executive Marco Tronchetti Provera, who wants the company to focus on broadband and media activities in Italy and the rest of Europe. The company last week entered into an agreement with News Corporation's unit 20th Century Fox under which its internet service will carry films produced by Fox. Provera's plans were part of a controversial restructuring, announced last week, to separate its Italian fixed and mobile operations into independent units. Provera's proposals sparked uproar when the centre-left government of Romano Prodi complained that it was not informed of the plan. The Italian government has expressed alarm at the prospect of Telecom Italia Mobile getting into foreign hands. Provera would be interested in selling TIM, which could fetch more than €35bn, to reduce the company's €41bn debt. The Italian government has made an alternative proposal for Telecom Italia to cede its network to state holding company Cassa Depositi e Prestiti. The government has since distanced itself from reports it might use its "golden share" in Telecom Italia to block any sale. Financial News revealed last week that Banca Leonardo, Lehman Brothers and Mediobanca had won the mandate to advise Telecom Italia on a possible restructuring and the sale of its mobile phone unit.
