Just spotted this piece of news here: Yahoo! France wants to buy an ISP. Waow that’s interesting. We already know that Yahoo! has ventured into the Internet access markets in Japan with Softbank and in the UK with a joint operation with BT.
The rationale behind it is odd, as AOL which is already part of a media group and an ISP can’t seem to pull it off. On the other hand, all ISPs such as Wanadoo (soon to be called Orange) and T-Online are all trying to compete with portals by creating their own portals and copying most features. Actually all French ISPs have their own portal, and I guess that grabs a big chunk of marketshare from the likes of Yahoo! and MSN.
However operating an internet access business is a very different ball game, and requires severe different skills such as telecoms for the pipe interconnection, and line quality management; consumer electronics skills for the set top box; customer care skills for the hotline; and extensive retail marketing experience in order to get marketshare. Yahoo! enjoys however 2 huge assets: the brand, and the existing skills (media buying for instance) behind the portal. I actually saw that live very recently while negotiating glowria’s presence on their portal. Hey… it should go live today or tomorrow next week!
Now let’s play the odd’s on who the target is by probable size of player:
- Wanadoo: nope, it’s within Orange’s strategy to play convergence so not for sale. And anyways, very very big.
- Free: a nice one, because they are only a French play, and have said repeatedly that they don’t want to expand. Market cap is today at 2,25 billion euros! They went up 5% today on the market, so I guess rumors are floating around (hadn’t checked before, but it jumped from 40 to 42 euros at the opening bell, although on rumors that mobile operator BouyguesTel is interested in playing convergence as well). The founder Xavier Niel (owns more than 60%) has always refused an exit, but I’m sure Yahoo! could find a way to sweeten the deal.
- Alice / Tiscali: Telecom Italia is trying to build a pan-european strategy, jus tbought Tiscali to put them out of their misery, so a lot of turnaround work to be done here, not likely Yahoo! France would like to do it.
- Neuf/Cegetel: just announced they would merge, so a lot of merger to be done. Adding a 3rd party would ruin probably the potential success. In addition they have a big B2B play in there, that Yahoo! wouldn’t be interested in.
- T-Online / Club Internet: part of T-Online’s strategy for Europe. They’ve committed about 800m euros to France, and building infrastructure. An unlikely sale, although more possible than the others.
- Tele2: not a strong player in France, better known for its low-cost positionning.
All in all, my best bet, if true, would be Free. Let’s see what happens 
Now playing: Gabe & Gabe - [email protected] "Amanda from Rocketboom in New York"
Update: it seems MSN and AOL might be in talks for a merger? (check the Washington Post here, via Lim).
Update2: it seems Y! France has officially denied being interested in buying an ISP, but is exploring opportunities with them. In that cause, I agree with Lim, that the most probably choice would be to work with the n°2 fiber operator in the country, NeufCegetel (their parent company built the infrastructure for Free as well).
