DT to Merge T-Online with France's Club-Internet

MUNICH (02/16/2000) - Deutsche Telekom AG and French media company Lagardère SCA announced plans to merge their respective Internet service provider (ISP) units, as part of a larger Internet alliance struck today.

Under the terms of an agreement, Deutsche Telekom's T-Online International AG will purchase 99.9 percent of Lagardère's Club-Internet, said Hans Ehnert, a spokesperson for Deutsche Telekom. Financial details of the transaction were not disclosed.

Lagardère will also take what currently amounts to a 6.5 percent stake in T-Online prior to its upcoming initial public offering in April, the companies said.

Lagardère executives will also sit on the supervisory board of T-Online, while T-Online executives in will, in turn, sit on both the supervisory and management boards of Club-Internet. The supervisory board plays a similar function to the board of directors in a U.S. company.

Deutsche Telekom and Lagardère will also look at creating a 50-50 joint venture for new Internet-related activities, as well as cooperating in the areas of portal management, content and online advertising, the companies said.

The alliance with Club-Internet, one of France's largest ISPs with 320,000 subscribers, should help T-Online carry out its goal of expanding beyond the German-speaking realm. Although it a year ago announced plans to expand internationally, until now it has only succeeded in launching a T-Online portal in Austria. [See "Germany's T-Online Goes International," Jan.27, 1999.] With magazines and online properties including Elle, Car & Driver and George, Lagardère will be able to broaden the content available to T-Online. For its part, Lagardère sees a bigger audience for its content. T-Online is Germany's largest ISP, with some 1.2 million subscribers.

The deal with Lagardère foresees allowing the French company to supervise the Club-Internet portal for at least three years, and still share in its revenues, according to a joint statement. Lagardère subsidiary Grolier Interactive Europe SA, renamed Lagardère.net, will manage the portal.

The two companies also see potential synergies between Club-Internet and Siris SAS, the French fixed-line carrier which Deutsche Telekom purchased late last year. Siris offers voice, data and IP (Internet Protocol) services, and is building a 5,000 kilometer-long fiber-optic network that connects France's major cities.

Separately, Deutsche Telekom today also said it has formed a joint-venture with German media company Kirch-Group to develop and market hardware and software for digital TV. The venture, in which the German carrier will hold a 51 percent share, will focus on set-top boxes, multimedia services, broadband Internet and video-on-demand services, Deutsche Telekom said. The two companies will also work to develop digital decoder technology.

Deutsche Telekom, in Bonn, can be reached at +49-228-181-4949, or via the Web at http://www.telekom.de/. Lagardère, in Paris, is at http://www.lagardere.fr/.

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