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Telefónica boosts Net biz
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June 6, 2000: 6:10 a.m. ET
Spanish telecom firm pays $1.6B for Bertelsmann's business Net arm
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LONDON (CNNfn) - Telefónica agreed to pay $1.6 billion in stock for mediaWays, a unit of German media giant Bertelsmann that provides business Internet and data services, extending the co-operation between the two firms.
Spain's dominant telecom operator announced plans to acquire mediaWays after stock markets closed Monday, saying it would fold the unit into its existing Telefónica Data business. Privately owned Bertelsmann will receive shares in Telefónica Data, or, if that unit is not listed as planned by the end of 2001, shares of Telefónica itself.
Telefónica shares were 2 percent higher in mid-morning trade in Madrid.
MediaWays ranks behind Deutsche Telekom (FDTE) as Germany's second-largest provider of Internet Protocol services for business-to-business Net transactions, carrying voice calls and high-speed data signals.
For Bertelsmann, the deal marks another step in its plan to withdraw from the Internet access business to focus on e-commerce activities, exploiting its huge roster of music recording and publishing talent. Among the German company's recording artists are stars such as David Bowie and Barry Manilow, while its book units publish authors such as John Updike and John Irving.
Telefónica and Bertelsmann are already linked through the proposed $12.5 billion purchase of U.S. Web portal Lycos (LCOS: Research, Estimates) by Terra Networks, Telefónica's separately listed Internet access subsidiary. Bertelsmann has signed a $1 billion five-year contract with Terra to provide Spanish-language content for the portal, and is also a 50 percent shareholder in Lycos Europe.
Terra-Lycos, as the new Internet company will be known, has also formed a joint venture for online book sales in Latin America with BOL.com, a Bertelsmann subsidiary. 
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