Telecom Italia to acquire Time Warner's AOL Germany Internet access business for EUR675 million.(GERMANY)

Telecom Italia and Time Warner Inc. announced that Telecom Italia has agreed to acquire Time Warner's AOL Germany Internet access business for EUR675 million ($870 million, Equity Value) in cash.

The companies expect to close the transaction in four to six months, after receiving the customary regulatory approvals.

In light of Germany's fast-growing demand for broadband Internet access (over 12 million ADSL subscribers as of June 30, 2006, that could increase by 10 million in the next three years), Telecom Italia is moving to consolidate its presence in Germany, which started with its acquisition of Hansenet in 2003 and expanded with its organic growth. Once its acquisition of AOL Germany's Internet access business closes, Telecom Italia will be Germany's second-largest broadband provider--with more than 3.2 million total subscribers, including nearly 2 million broadband customers.

Telecom Italia is already a European leader in broadband Internet access. With its presence in Italy, France, Germany, and the Netherlands, as well as its pending acquisition of AOL Germany's Internet access business, Telecom Italia will serve approximately 9 million broadband subscribers in Europe. Under a new partnership, AOL will provide co-branded audience services and content on a joint Web portal for all of Telecom Italia's residential Internet access subscribers in Germany and will handle all online advertising sales.

AOL Germany has operated as an ISP for over 10 years and competes in both narrowband and broadband Internet access. As of June 2006, AOL Germany ranked second and third among German narrowband and broadband

access providers, respectively, with 1.1 million broadband subscribers and approximately 1.3 million narrowband subscribers.