AOL seeks to sell French operations to Neuf Cegetel

Companies discuss partnership involving AOL portal.

AOL has begun exclusive negotiations to sell its French Internet access business to telecommunications operator Neuf Cegetel. The companies are also discussing a partnership through which AOL would offer its portal services directly to Neuf Cegetel's customers, AOL France spokesman Philippe Etienne said Thursday.

On Wednesday, AOL announced that it will open up many of its entertainment, information and communications services around the world to all comers for free, and not just to those subscribing to its dial-up and broadband Internet access services.

That's a strategy that the French subsidiary has been putting into practice since April, gradually moving most of its content to the public site from the "walled garden" previously accessible only to subscribers to AOL's Internet access service, Etienne said.

As a result, use of the service has boomed, with visits to AOL France's music site increasing by 100,000 every month since April, he said. Meanwhile, visits to its football site jumped to 800,000 a month from 300,000 a month in April, though the recent World Cup competition may have boosted interest there.

The negotiations between AOL and Neuf Cegetel cover AOL Europe Services SARL's broadband and dial-up Internet access services in France, and also its customer service center in Marseille. They put an end to Telecom Italia SpA's hope of acquiring AOL's French operations: the company said in late June that it had bid for AOL's French and German Internet access activities. AOL has acknowledged that all its European Internet access businesses are under review.

Neuf Cegetel could gain around 500,000 broadband subscribers from the deal, AOL's Etienne said. Neuf Cegetel has about 1.3 million broadband subscribers in France. Of AOL's 24.5 million Internet access customers worldwide, about 6 million are in Europe. In France, the company has 1 million subscribers, half of them using its broadband service, he said.

The companies hope to complete the sale before the end of the year, subject to consultation with employee representatives, a legal formality required for any merger in France.

Copyright © 2006 IDG Communications, Inc.

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