Iliad in talks to acquire Alice

June 9, 2008 - Iliad, owner of French ISP Free, has revealed that it is in discussions to acquire Telecom Italia's French unit Alice, based on a value for Alice France of up to €800mn (US$1.25bn).

The negotiations are expected to be concluded by the end of September, and Iliad said in a statement that the buy would boost Free's position as the largest alternative broadband provider in France. Free has a reported total of over 3mn ADSL subscribers, while Alice has around 940,000, and both offer IPTV services in the country.

Telecom Italia operates under the Alice brand in France, the Netherlands, Germany and Italy, however the sale involves only the French unit, which is owned by Liberty Surf Group SAS, part of Iliad. The deal would give Iliad the second largest share of the country's broadband market after France Telecom, increasing its stake from 20% to 26%.

Thomas Reynaud, CFO of Iliad, commented that the purchase of Alice will result in sales, cost and tax synergies, adding that the company will be able to reduce advertising and network costs and also benefit from tax-deductible losses at Alice in the past. "The size of the subscriber base is extremely important to improve the return on investment and the profitability of our fibre investment," he said.