The latest deal in the Europe-wide consolidation of broadband operations reflects current market conditions, United Internet AG's (UTDI.XE) Chief Executive Ralph Dommermuth Tuesday told Dow Jones Newswires in an interview.

United Internet said it was buying about 700,000 customers for digital subscriber line, or DSL, services for about EUR123 million from German competitor Freenet AG (FNT.XE). 0

The deal volume is much lower than previously expected. Only in February, Freenet's DSL operations were worth around EUR300 million according to analysts' estimates.

"The deal isn't a bargain but reflects the current situation in the DSL market," Dommermuth said. He added that United Internet last year was willing to pay around EUR1 billion for Freenet's DSL operations, but had the chance to carry out due diligence after a change in Freenet's management.

However, the deal is justified because it will boost the profitability of United Internet's own DSL business, Dommermuth also said without elaborating further.

"Our deal and the Carphone Warehouse/Tiscali deal has more or less less the same valuation, the could be used as a benchmark for other deals," Dommermuth said.

Carphone Warehouse Group PLC (CPW.LN) earlier this month became the U.K.'s second-biggest broadband player, after clinching a deal to buy the U.K. assets of Italian Internet service provider Tiscali SpA (TIS.MI), with its 1.45 million customers, for GBP236 million.

Dommermuth still declined to comment whether United Internet is interested in acquiring Telecom Italia SpA's (TI) German broadband unit Hansenet, in which Vodafone PLC (VOD) and Telefonica SA (TEF) have already expressed interest.

Company Web site: http://www.united-internet.de

-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218, archibald.preuschat@dowjones.com
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