Pinault-Printemps-Redoute and 9Telecom a subsidiary of Telecom Italia, are forming a strategic alliance for Internet service provision

11/22/2000 - 00:00 PM

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This agreement capitalizes on the two groups´ respective spheres of expertise:
 - PINAULT-PRINTEMPS-REDOUTE, building on the success of its free ISP, MAGEOS (with 600,000 subscribers to date), and keen to extend its range - immediately by a supplementary package and, during 2001 by high-speed access (e.g. ADSL) - is joining forces with the French telecommunications operator 9 TELECOM, a subsidiary of TELECOM ITALIA. The latter is contributing technological expertise in the networks domain, and operational know-how in e?services (Jet Multimédia).
 - For its part, in addition to the acquisition of the portfolio of MAGEOS subscribers, 9 TELECOM will provide operational management of the portal and free Internet service provision. It will also benefit exclusively for a 5-year period from PINAULT-PRINTEMPS-REDOUTE´s recruitment strength via its distribution network (over 500 stores, 15 Internet trading sites, and 7 mail-order catalogues representing nearly 40 million parcels per annum), and its leading position in the distribution of personal computer products in France (Conforama, Fnac and Surcouf).

This agreement provides for:
- The acquisition of MAGEOS Internet service activities (access and portal provider) by 9TELECOM and exclusive distribution for a 5-year period in PINAULT-PRINTEMPS-REDOUTE group Retail companies, principally compensated by 9 TELECOM shares and services for an initial amount of €50 million, to which two installments at the end of 2001 and 2002 will be added, to reach a total amount of €110 million
 - A distribution agreement incorporating a commissioning contract potentially reaching €80 million over 5 years, in cash.
François-Henri PINAULT, Deputy Managing Director of the PINAULT-PRINTEMPS-REDOUTE group, responsible for e-commerce activities, announced: "Demand from our customers for Internet access services is becoming stronger and stronger. We had to extend our package to fixed-rate and rapid access to meet this demand. This alliance with a full telecommunications operator now seems to us to be the only economically viable model for the long term. It will enable us to bolster our access provision which is central to our personal computer products distribution business, and to perpetuate MAGEOS´ mission as a traffic-generating vehicle for our trading company websites."

Oscar CICCHETTI, International Vice-President of the TELECOM ITALIA group commented:
"TELECOM ITALIA is keen to consolidate and develop its presence in France, as demonstrated by the rapid growth of 9 TELECOM, the acquisition of Jet Multimédia, a leading company in hosting services, and this extremely important agreement with the PINAULT-PRINTEMPS-REDOUTE group.
With this alliance, TELECOM ITALIA is acquiring an important associate at the heart of 9 TELECOM, a frontline partner of choice to develop and distribute the new generation Internet services."

Bernard MARCHANT, Chairman and Managing Director of 9 TELECOM adds: "Internet access services are in the process of becoming the core business of telecommunications operators. The opening of a local loop and the advent of high-speed are opening up new opportunities on the wired telecommunications market; its development is related to the implementation of ever more innovative and competitive offerings. The recipe for successfully handling this change requires three key assets: a solid network and hosting infrastructure, content and services that meet customer requirements, and finally high-profile distribution channels. Our strategic alliance with the PINAULT-PRINTEMPS-REDOUTE group is based on our complementary strengths and a shared vision of this market."

PINAULT-PRINTEMPS-REDOUTE, the European leader in specialized distribution, fully intends to be the leader in on-line sales in Europe, through the increasing strength of its trading names´ e?commerce activities (click & mortar strategy), and through the development of new cross-activities for generating traffic directed by its dedicated subsidiary, PPR-Interactive, founded in October 1999. This strategy has already enabled the Group to develop over 50 trading sites in Europe and in the United States. Internet sales of €150 million are expected for the year 2000.

TELECOM ITALIA is one of the world wide leading telecommunications operators (the historical operator in Italy), with an international presence in Europe, in Latin America and the Mediterranean Basin. 9 TELECOM, the French subsidiary of TELECOM ITALIA, has invested nearly FF9 billion in development since its creation in 1998 and has its own national infrastructure (4,000 kms of fiber and 44 points of presence). 9 TELECOM is present on the individual user and business market, with over 750,000 customers and provision for Voice, Data and the Internet. Its rates are among the market´s most competitive and it offers an innovative product range. TELECOM ITALIA has just acquired the company Jet Multimédia, one of the principal multi-platform hosts in France. Its ambition is to become a major player in the Internet sector, both for the general public and business.