The four horse race to land the last big pile of broadband lines likely to be for sale in France for some time at Telecom Italia’s Alice France service, has been won by the ISP called simply Free, owned by Iliad.
The deal has gone exclusive, which is takeover code for opening up your books for diligence to confirm what you are selling is what you said it was, and a price will have already been agreed, understood to be just under $1.24 billion or €800 million. If nothing goes wrong with these negotiations then the other players will miss out on the deal and they are known to be Neuf Cegetel, cable operator Numericable, and 3rd placed cellular operator Bouygues Telecom,
Our money had gone on Neuf Cegetel winning out simply because it had been the hungriest when buying both Deutsche Telekom’s Club Internet unit for $456 million, and AOL France broadband customers for $365 million, last year.
The bidding for Alice was all triggered back in January partly due to the cost of doing business in Europe’s most congested broadband market, but also by the poor financial state and heavily debt burdened parent, Telecom Italia.
This deal will take Iliad back to number two as an ADSL operator in France. Currently it has 3 million broadband customers, split across ADSL and its new Fiber to the Home project, and its great rival Neuf Cegetel has 3.3 million. The Alice business would add a further 900,000 to the pie.
We said back in January that using past ISP deals in Europe as a price guideline the Alice customer base might fetch something over $650 million perhaps as much as $700 million. But partly because there are multiple bids and partly because the average revenue for Alice customers is higher than simple ISP lines, including TV subscriptions, it has gone far higher.
The company under French law has to go through a lengthy consultation process with employees and needs other shareholder approvals and expects to complete the transaction by the end of the third quarter of 2008.
The last remaining major ISP that is up for sale in what has been a two year period of consolidation for European ISPs is Tiscali, with major assets in both Italy and the UK, which is thought to be leaning towards a sale to Vodafone.