Internet Disposal

Deutsche Telekom's Spring Clean

Deutsche Telekom HQ Bonn DPA
Deutsche Telekom's headquarters in Bonn.
  • Why it matters

    Why it matters

    If Axel Springer bought T-Online and its online marketing service, it would boost Springer’s digital operations and relieve Telekom of an unwanted asset.

  • Facts

    Facts

    • T-Online is Germany’s most used Internet site, with 374 million monthly visits.
    • A sale of T-Online fits with Telekom’s move out of content-driven Internet products.
    • In 2013, about 50% of Springer revenues were generated by digital media.
  • Audio

    Audio

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Deutsche Telekom, the German telecommunications giant and former state-owned monopoly, is adding its popular online portal T-Online to the list of products it will consider selling, according to a report in the German weekly business news magazine WirtschaftsWoche.

T-Online, which is Germany’s most popular Internet site with 374 million visits per month, is the first exclusively German product to be added to a list that includes its U.S. subsidiary, T-Mobile, and a British joint venture, Everything Everywhere (EE).

Possible buyers include Berlin-based Axel Springer, one of the largest multimedia news and digital publishing houses in Europe.

Deutsche Telekom declined to comment and no one could be reached for comment at Springer.

Industry insiders told Handelsblatt that Springer is not only interested in the T-Online portal, but also in the online marketing service, Interactive Media, which markets a diverse set of websites, including AutoScout24 (cars), Bunte.de (a German illustrated weekly), Kicker Online (a soccer magazine) and Wetter.info (weather forecasts).

If Springer proceeds with an acquisition, Interactive Media would be absorbed into Axel Springer Media Impact (ASMI), the company’s media marketing and sales arm.

Springer founded Interactive Media in 1988. T-Online took a 50 percent share of the marketing service in 2001, creating an online service where both companies were deeply interwoven. Springer’s daily tabloid, Bild, was named Bild-T-Online.de and was 37 percent owned by the Deutsche Telekom subsidiary. Those ties loosened in 2003, when T-Online took full ownership of Interactive Media. In 2008, Bild.de and T-Online parted company entirely.

Under Chief Executive Officer Mathias Döpfner, the Springer Group is increasing its focus on the online business. In 2013, about 50 percent of revenues were generated through digital media. With 294 million monthly visitors, Bild.de also has a huge readership.

 

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However, it is questionable whether the German Federal Cartel Office would give the green light to any takeover.

Rumors about T-Online’s future first surfaced in June, but little has happened since then. Industry sources report Springer has not yet examined T-Online’s books, but will do so in the coming year.

Sources also say Springer is not the only potential suitor for the online outlet. Munich-based Tomorrow Focus, a leading provider of digital media content in Germany, also showed interest, according to German news magazine Der Spiegel, though the company is no longer in the running.

What is driving the planned sale of T-Online and Interactive Media is the apparent lack of interest in content-driven services by Timotheus Höttges, Deutsche Telekom’s CEO.

The rumors have given rise to uncertainty on Internet forums. Some outraged users declared they don’t want their Internet access going through Springer’s publishing house, but those worries are misplaced. T-Online long ago ceased being an access provider. The possible sale concerns only the T-Online.de online portal.

What is driving the planned sale of T-Online and Interactive Media is the apparent lack of interest in content-driven services by Timotheus Höttges, Deutsche Telekom’s CEO since January. This is a stark contrast to his predecessor, René Obermann.

The company has sold off 70 percent of its shares in the Scout24 portals, which include Immobilienscout24 (real estate and apartment rentals) and Autoscout24 (car sales) for €1.5 billion ($1.84 billion) to the American private equity firms Hellman & Friedman and Blackstone.

In May, Deutsche Telekom closed its music streaming service, Musicload. Deutsche Telekom executives insist they are under no pressure to sell the T-Online portal because it continues to generate a one to two-digit million-euro profit.

Telekom is markedly non-commital about its other housecleaning sales. Several firms interested in T-Mobile US have given up their pursuit because the company showed little interest in their offers.

 

Kai-Hinrich Renner reports on the media industry from Hamburg. Ina Karabasz has been an editor at Handelsblatt Live since 2013. To contact the authors: renner@handelsblatt.com, karabasz@handelsblatt.com.

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