EU gives go signal to sale of AOL German unit

EU regulators cleared an agreement by Telecom Italia to buy AOL's German access business, saying the combined company still would face formidable competition, according to an Associated Press report.

The report said upon closing, Milan-based Telecom Italia will become the second-biggest provider of broadband Internet in Germany with 3.2 million customers, behind Deutsche Telekom's T-Online International.

Telecom Italia has agreed to pay $856 million in cash to AOL parent Time Warner to gain a firm foothold in the German market, the report added.

The European Commission said overlaps between broadband and dial-up Internet access services were limited.

'The combined firm would continue to face a number of strong, effective competitors, notably the incumbent Deutsche Telekom,' it said.

The deal will bring to more than 9 million the number of Telecom Italia subscribers in Italy, France and Germany. In Germany, the company operates Hansenet, which it acquired in 2003, and offers broadband under the ' Alice' brand.

AOL Germany has 1.1 million broadband users and 1.3 million subscribers who use dial-up or ISDN to access the Internet.

The changes are expected to cost 5,000 jobs at AOL, or a quarter of its global work force, although some would be hired by Telecom Italia and other buyers, the report further said.