United Internet acquires Freenet's DSL business

The latest deal in the Europe-wide consolidation of broadband operations reflects current market conditions, United Internet AG's Chief Executive Ralph Dommermuth reports Dow Jones Newswires.

United Internet said it would acquiring about 700,000 DSL customers for €123 million from German competitor Freenet.

The price is much lower than expected: as recently as February, analysts’ estimated Freenet's DSL operations were worth around €300 million, the newswire says.

It quotes Dommermuth saying, "The deal isn't a bargain but reflects the current situation in the DSL market."  He added that United Internet last year was willing to pay around EUR1 billion for Freenet's DSL operations, but had the chance to carry out due diligence after a change in Freenet's management. The insisted the deal is justified because it will boost the profitability of United Internet's own DSL business, Dommermuth also said without elaborating further.

"Our deal and the Carphone Warehouse/Tiscali deal has more or less less the same valuation, the could be used as a benchmark for other deals," Dommermuth was also quoted saying.