RealTime IT News

Swisscom Bids $4.9B For Italian Network

Fastweb, Italy's second-largest IP network operator, today conditionally accepted a $4.9 billion cash takeover bid by Swiss state-controlled telephone giant Swisscom.

Swisscom's offer of $61.83 (47 euro) for each Fastweb share is contingent on the government-run telephone company obtaining at least 50 percent of Fastweb stock, the two companies said.

Acquiring Fastweb, which has more than 1 million broadband customers in over 130 Italian cities, will give Swisscom up to a five-year lead in the development of new IP technologies, including broadband access, Internet voice and IP television, the company said in a statement.

The deal also gives Swisscom a new revenue stream, as well as provides opportunities for further growth.

Analysts see the acquisition benefiting both companies.

"Fastweb has always been the poster child of a successful implementation of triple-play," explained Gartner analyst Patti Reali. Reali, who once lived in Italy, said savvy users and high PC penetration makes the country a very attractive broadband market.

Fastweb last year inked a deal allowing it to distribute News Corp.'s Sky Italia content to broadband users. Since 2001, Fastweb has offered IPTV to subscribers.

In return for Fastweb's contribution, Swisscom said it will help the broadband provider become an Italian mobile virtual network operator . Vodafone has a 25 percent stake in the Swiss-based telecom, Reali continued.

Although the acquisition by Swisscom exploits Fastweb's lead in IP technology, the Swiss telephone service assured shareholders Fastweb will remain Fastweb. Fastweb's business operations, management and marketing will remain separate, Swisscom said.