Telecom Italia Bolsters European Internet Presence

ROME (08/01/2000) - Seat Pagine Gialle SpA, the Italian yellow pages directory publisher which is in the process of merging with Telecom Italia SpA's Internet division, has agreed to buy 100 percent of Thomson Directories, Britain's second-largest directory company, for 501 million euros (US$464 million), the Italian company announced Tuesday.

The announcement comes one day after Seat agreed to buy control of Consodata SA, a French marketing information company, and while it is in negotiations to buy Italy's third largest terrestrial television company, Telemontecarlo. All three moves are intended to strengthen the merged Seat-Tin.it Internet company's access to pan-European content, commentators said.

"Our aim is to be the leading Internet company in Italy in both the business-to-business and business-to-consumer markets, and to strive for a leadership position in the European market as well," a Seat source said, speaking on condition of anonymity. "The intention is to create a Europe-wide network, concentrating above all on business-to-business content. That sort of content crosses borders more easily, while business-to-consumer is inevitably more local."

Seat, which has also made acquisitions in Spain and Germany, will buy 100 percent of TDL Infomedia Ltd., the company that publishes the Thomson Directories, the company said. Thomson distributes its "Thomson Local" directories to 22 million [M] individuals and companies in Britain, accounting for 16 percent of the British market. TDL Infomedia also controls a significant stake in TDL Belgium SA, Belgium's second largest directory distributor, Seat said in a prepared statement.

The company on Monday agreed to buy Consodata SA, a French company specializing in the purchasing habits of European families, which operates both on- and offline databases, for 633 million [M] euros, Seat announced. In recent months it also expanded its stake in Euredit SA, the French company that publishes Europages, a European yellow pages directory aimed at the business market and which is about to launch a business-to-business portal called Euronline.com, it said.

Seat's appetite for content has also led it into politically delicate negotiations for the purchase of Telemontecarlo and Telemontecarlo 2, nationwide commercial television networks that constitute Italy's third largest television group. The company has reportedly bid 1.2 trillion lire ($574 million) for the TV channels, which are owned by the Florence-based entrepreneur Vittorio Cecchi Gori.

Italy's Antitrust Authority has given a provisional green light to the Seat-Tin.it merger and Telecom Italia sources say they are confident the deal will be completed in the fourth quarter. The purchase of Telemontecarlo, however, will have to overcome the constraints of an Italian law which prevents the holders of a public telecommunications license from operating in the broadcasting sector. It will also have to overcome hostility from the political allies of Silvio Berlusconi, who combines leadership of the opposition with ownership of the country's largest commercial broadcasting group, Mediaset SpA.

"These acquisitions are likely to be welcomed by Telecom Italia's shareholders," said Oriana Guidi, senior research analyst with International Data Corp. (IDC) in Milan. "They send a strong signal that Telecom Italia wants to move into added value sectors and take control of the whole value chain.

Tin.it wants to grow, to move beyond being a mere Internet service provider (ISP) and become a content provider as well."

The acquisition of local companies is the best way to establish a local presence around Europe, and local users prefer local content that is culturally familiar and in their own language, Guidi said. "It will be difficult to establish a homogeneous dominance throughout Europe because of these cultural factors," she said. Tin.it's quest for content is an appropriate response to increasing competition, as ISPs seek to become media companies and media companies begin opening their own portals, Guidi said.

Telecom Italia can be contacted in Rome on tel. +3906 36882066 or on the World Wide Web at http://www.telecomitalia.it.

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