Telecom Italia new CEO Franco Bernabe, just a month into the job, has put its French ISP on the block, after saying at his appointment that he was more interested in acquisitions than disposals. Chances are the sale of the Alice ISP in France was already on the cards when he took over.
It is one thing to retrench to the home country of Italy by selling off fast growing Latin American mobile operations, but it is another entirely to sell off an ISP in the toughest country to compete in, in Europe.
Alice France has been hell bent on a triple play, and had an aggressive investment plan, including new fiber, and more unbundled exchanges, and had just cut a deal with Canal+ to offer a hybrid triple play with its TV service and Alice broadband and VoIP.
Deutsche Telekom, upon appointing new management did exactly the same, selling off its French Club Internet, which it once dreamed would give it the same ISP penetration in France as it enjoys in Germany and some central European countries, and now it is Telecom Italia’s turn.
Already Telecom Italia has lowered its capex plans for the next few years, pushing back spending on an all IP network in Italy, until well into 2010 and courting rivals such as Fastweb to share existing fiber, rather than install its own.
The likely buyer for the Alice operation must include Neuf Cegetel, which landed both the Deutsche Telekom’s Club Internet unit for $456 million, and AOL France broadband customers for $365 million a year earlier.
Using those deals as a price guideline the 882,000 Alice customers might fetch a minimum of $643 million, but given that average revenues for these customers might be higher, including TV subscriptions, it may go for slightly more.
Telecom Italia had been set, just over a year ago, on the path to sell off its mobile subsidiary Telecom Italia Mobile, but changed its mind after Italian government intervention, at a time when operators the world over were looking to benefit from quadruple play services.
In October Telecom Italia finally launched its own first quadruple play bundles called Unica, offering three separate bundles of mobile voice, fixed IP voice, unlimited internet access and IPTV around its Alice Home IPTV services, offering 100 TV channels and 3000 VoD titles, in packages that bundle either 30, 60 or 90 minutes of mobile voice.
It clearly was never going to get close to this kind of offer in France, given its minority market share in internet customers and French press reports now say that investment bank Calyon, part of Cr’dit Agricole, has already been appointed to handle the sale.
The big question is whether or not Telecom Italia will also sell its German ISP triple play, which uses the Hansenet brand, and which acquired AOL Germany in 2006 right from under the noses of Telefonica and Vodafone, both rumored at the time to be chasing more ISP market share in Germany. That cost around $855 million and added to the Hansenet customer base would now fetch more than $1.3 billion.
If it does that, Telecom Italia would only be a cellco outside of its native Italy. We should expect that this will be the next move we hear about.