Telecom Italia has divested its German DSL subsidiary, Hansenet in a €900 million sale to Telefonica.
TI said the sale would help cut its €35 billion debt and concentrate on its core markets of Italy and Brazil.
Hansenet made a loss of -€19 million in the first nine months of 2009 on sales of €196 million, TI said. Net debt widened from €526 million at the end of last year to €610 million at September 30.
TI said that “given the size and infrastructural characteristics” of Hansenet’s competitors, it long-term success would be “difficult in the absence of heavy investments whose return would be uncertain.”
The sale of the German unit also “makes further tapping of the bond market unnecessary.”
Telefónica O2 Germany will become the number three player in the German market in terms of revenue, following the finalization of the acquisition. The combined annual revenue of the company is estimated to be around €5 billion.
“As one of the leading DSL-providers in Germany, Hansenet is a perfect match for O2. Both companies are defined by a challenger spirit and have proven success stories in their fields,” said Telefónica Europe Chairman and CEO Matthew Key.
The deal represents a significant coup for Telefónica, bolstering its position in the German market with 15 million mobile and 2.4 million DSL customers in the country.