Germany’s Energy Giants Sell Telco’s Wireline Business

RWE and VEBA, Germany’s energy giants, have sold the wireline business of their joint venture telco Otelo to Mannesmann Arcor for DEM 2.25 billion (US$1.24 billion).

The acquisition of Otelo’s wireline business includes the wholly owned subsidiary with more than 600,000 Internet clients and rights to Otelo’s 11,000 Km of optical fiber cable. This makes Mannesmann Arcor the major player in wireline communications in Germany with a stake of over 50 per cent.

Mannesmann Arcor already has 1,000 major clients, including RTL, Bahlsen, Dresdner Bank, the State of North-Rhine Westphalia, many thousands of SMEs and 400,000 private clients.

RWE AG, one of Germany’s leading industrial corporations, employs 145,467 and generates annual sales worldwide of around DEM 73 billion (US$40.1 billion). It has interests in energy, mining, raw materials, petroleum and chemicals, environmental services, industrial systems, telecommunications and construction and civil engineering.

VEBA is Germany’s fifth largest industrial corporation in terms of sales which are in excess of DEM 83.6 billion (US$45.95 billion). VEBA employs 116,774 and counts energy, chemicals, oil and telecommunications as its core business. It is also active in distribution, logistics, real estate management and silicon wafers.

The majority interest of RWE and VEBA in the wireless operator E-Plus (60.25 per cent) and the cable business of Otelo’s subsidiary TeleColumbus are not part of this deal. E-Plus wireless operations are developing successfully and will break even in operating terms in the year 2000. Proceeds from the Otelo sale are expected to go into E-Plus. Vodafone has stated that it wants to sell its 17 per cent of this telco; however, Bellsouth has the first option to buy.

Meanwhile, back at Deutsche Telekom’s T-Online ISP, price reductions are scheduled for up to 65 per cent for their three million clients. Rates which varied from 8 to 13 Pfennig (Citycall and T-Online) will be going down to 6 Pfennigs per minute, with a 3 Pfennig rate after 5 hours on line. T-Online’s portal site is the most frequently visited site on Germany’s Internet and Germany and Europe’s biggest Internet access provider.

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