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In a story earlier we were discussing the implications of the filing from Neuf Cegetel for its proposed IPO by the end of October and what it may mean for Time Warner (TWX). We were able to dig down further to come up with more specific and more detailed numbers and make some more calculations. The interesting thing is that this IPO from France Cegetel really could be the catalyst that acts as a valuation peg or "bogey" for Time Warner's AOL units in Europe. AOL Europe consists of AOL France, AOL Germany, and AOL UK. As noted, the company is known to be a seller of these units and these jobs are already on the Time Warner chopping block. These geographic units inside AOL Europe are going to have different valuations because of geographic differences, but that should be obvious. After all a cable Internet subscriber pool in New York based mostly of higher turnover renters may have an entirely different value than a subscriber pool of homeowners in areas that have fewer competitors to choose from.
AOL France is said to be the third largest online ISP in France with about 1.2 million members. AOL Germany is said to be the No. 3 ISP in Germany as well, but it has 2.8 million members with nearly 600,000 of those being broadband users. AOL UK claims to be the No. 1 subscription online service there (may or may not be the case) with 2.3 million users, of which 500,000 are broadband users. It is no secret about what is going on at AOL as far as the job cuts and the desire to unload these units from the books.
The price fluctuations on the other country assets vary, and it starting to seem obvious that one of these deals has to essentially close before the others will happen.
That is just the way of the world where someone wants to see which shoe will drop first so they aren't deemed by shareholders of being guilty of overpaying for an asset. An issue worth noting is that the telecom and cable in Europe and the charges for telecom services in Europe tend to be higher and tend to be less flip-floppy than they have been in metro clusters in the US such as New York, Chicago, L.A, and other sprawls with massive competition from what has seemed to be dozens of providers. You cannot just go out and assume that since the other markets are larger that you can just double the numbers to reach a valuation because that would be naive, but what you can do is make certain assumptions based on what is slightly under the lower-end of the French price range (be conservative and assume "market conditions" are always a risk). If you do the conservative calculations you will determine that this could still generate somewhere in the vicinity of over $1 billion (maybe up to $1.3 billion or so) after it is all said and done.
The rumored price was over $577 million and then under $577 million for the AOL German unit. We are here in the US and haven't spoken with the deal makers there, so this could be true or it could be false. Market chatter and market talk from initial newspaper and online reports quite often ends up being far different than the end sum. Either way, there are at least some terms you can try to use for basic calculation here. There are too many discrepancies to really delve right down into the UK numbers, but you can assume it is worth something between Zero and Substantial. Based on the values of other ISP's and web access deals, you know the value is far from Zero. The real truth is that there have just been too many ponderings and speculated buyers or partners there in the UK to note, so we'll leave the UK alone for now.
We often look for backdoor plays into IPO's and other special investment situations, and this Neuf Cegetel filing details seems to fit the bill. If the company wasn't focusing on a certain Euro and Dollar amount then we would perhaps have a different viewpoint. The French-based Neuf Cegetel telecom could also look at issuing a small amount of additional debt if it chooses or if it needs to, but we are right now just trying to count the cards the dealer has dealt.
The rumored price was over $577 million and then under $577 million for the AOL German unit. We are here in the US and haven't spoken with the deal makers there, so this could be true or it could be false. Market chatter and market talk from initial newspaper and online reports quite often ends up being far different than the end sum. Either way, there are at least some terms you can try to use for basic calculation here. There are too many discrepancies to really delve right down into the UK numbers, but you can assume it is worth something between Zero and Substantial. Based on the values of other ISP's and web access deals, you know the value is far from Zero. The real truth is that there have just been too many ponderings and speculated buyers or partners there in the UK to note, so we'll leave the UK alone for now.
We often look for backdoor plays into IPO's and other special investment situations, and this Neuf Cegetel filing details seems to fit the bill. If the company wasn't focusing on a certain Euro and Dollar amount then we would perhaps have a different viewpoint. The French-based Neuf Cegetel telecom could also look at issuing a small amount of additional debt if it chooses or if it needs to, but we are right now just trying to count the cards the dealer has dealt.
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