Telecommunications giant AAPT has positioned itself for a solid assault on ISP market leaders OzEmail/Eisa and Telstra by entering negotiations with America On-Line (AOL) to form an alliance with its local operations.
The two companies revealed they were in discussions just days after AOL announced it would buy German media company Bertelsmann's 50 per cent stake in AOL Australia and AOL Europe in a stock deal believed to be worth between $US6.5 billion and $8.25 billion.
Combining AAPT's estimated 80,000 Internet subscribers with AOL Australia's customer base of about 60,000 customers would help AAPT emerge from the pack of tier-two Internet service providers (ISPs) in the local market including One.Tel and Primus, according to industry observers.
Officials from the two companies were unavailable for comment at presstime, but it is understood AAPT intends to retain control of its access and business Internet operations while spinning off its other ISP businesses into a joint venture with AOL.
Earlier, AOL had taken responsibility for the day-to-day operations of the local subsidiary after deciding to part ways with Bertelsmann on the alliance which was formed when AOL Australia launched in October 1998.
AOL has agreed to buy out Bertelsmann's share of the local company - and AOL Europe - after January 31, 2002. In the meantime, the two companies have embarked on a four-year strategic partnership valued at $US250 million that will see Bertelsmann provide AOL with media content and e-commerce for worldwide distribution over AOL's various channels.
Specifically, Bertelsmann's e-commerce content will be distributed over AOL, CompuServe and Netscape Online interactive services, AOL Instant Messenger, ICQ, AOL.COM, Digital City, Spinner and Winamp.
Bertelsmann will in turn call AOL, CompuServe and Netscape Online its "Preferred Interactive Services".
As part of the agreement, Bertelsmann will make an up-front payment of $US70 million to AOL.
Officials from AOL Australia and AOL Europe insisted that the sale had nothing to do with AOL's recent decision to merge with Time Warner, a rival to Bertelsmann.
However, Bertelsmann at one time had a roughly 5 per cent share in AOL, but has reduced that more recently to less than 1 per cent.