Neuf Cegetel and Time Warner announced that they have finalized their agreement, after exclusive negotiations, for Neuf Cegetel to acquire AOL France's Internet access business for EUR 288 million ($365 million) in cash.

Once the transaction closes:

• Neuf Cegetel will acquire AOL's French Internet access business, including 500,000 broadband customers, and its AMSE operation, which manages AOL France's customer service operations (500 people).
• AOL will provide audience services and manage the online advertising sales for Neuf Cegetel's Internet portal audience on www.neufportail.fr and www.cegetelportail.fr as well as www.aol.fr, which together total 9 million unique visitors monthly.

With this acquisition agreement, Neuf Cegetel reinforces its position as the leading alternative provider in its markets: mass market, enterprises and operators. In the mass market, AOL's 500,000 broadband customers should allow Neuf Cegetel to reach 2 million ADSL subscribers before the end of 2006, a year earlier than planned. And, by encouraging AOL's dial-up customers to migrate to broadband access, Neuf Cegetel expects to accelerate the growth of its market share.

In addition to the Internet access business and AMSE, Neuf Cegetel has made a commitment to hire up to 140 AOL France employees, who will fill open positions within its group. This "light" transaction structure will allow Neuf Cegetel to optimize quickly the margin generated by AOL's subscriber base, which will benefit from its cost structure.

The agreement requires the approval from the French competition authorities, which could be reached end of October. The price of the transaction amounts to some EUR 288 million, which Neuf Cegetel will pay with its cash assets.

A powerful enlarged customer base with a strong value creation potential

"With the integration of AOL France's Internet access business, Neuf Cegetel should benefit from an increase in its revenues (it already provides most of AOL's DSL links on a wholesale basis) and margins, with the switch from a wholesale margin to a margin in line with its other retail activities."

In the short term, nothing will change for AOL customers (all DSL customers are in fact already connected to Neuf Cegetel's network), who will continue to enjoy their current Internet access plans and portal services. At the end of 2006, all of AOL's broadband customers will benefit from innovative services offered by Neuf Cegetel, such as Neuf TV DSL TV, mobile telephony and TWIN (TM) *, among others. This should enable Neuf Cegetel to grow its revenue per subscriber progressively, as well as increase customer loyalty. Neuf Cegetel will also make attractive offers to AOL France's dial-up customers to migrate to the group's broadband offers, which are among the most attractive and innovative on the market.

Thanks to the agreement on portal services, AOL customers will continue to benefit from their portal services and AOL software.

* TWIN (TM): the first French GSM-WiFi phone

An attractive portal: "AOL pour Neuf"

In 2007, AOL will start providing audience services, including editorial content, and manage online advertising sales for all of Neuf Cegetel's Internet portals. AOL's expertise as well as its content and other services will enhance the www.neufportail.fr and www.cegetelportail.fr portals, which together serve 3 million unique visitors per month. The portals' advertising and other revenues will be shared between Neuf Cegetel and AOL.

AOL will continue to program its www.aol.fr portal and pursue the development of all its content and other audience services. The AOL portal now attracts nearly 5.5 million unique visitors per month (source: Nielsen Net Ratings August 2006).

Jacques Veyrat, Chairman and CEO of Neuf Cegetel said: "This agreement allows Neuf Cegetel to reach the target set for the mass market a year ahead of time. Furthermore, all our customers will now benefit from attractive portal content and services thanks to the partnership with AOL."

Dick Parsons, Chairman and CEO of Time Warner Inc., said: "This agreement is the second stage of our current initiative to build a more competitive and profitable AOL Europe - a strategy that we're pursuing in all of our businesses. Once the pending sales of our Internet access businesses in Germany and France, as well as negotiations underway in the United Kingdom, are successfully concluded, AOL will be a leading provider of audience services in Europe. This robust platform will position AOL Europe well for developing - in line with AOL's overall strategy - its online advertising business."

Jon Miller, Chairman and CEO of AOL LLC, said, "The partnership between AOL and the Neuf Cegetel group is an important next step in AOL developing its Web business in Europe. AOL France has an ideal partner to work with, and the collaboration will benefit the subscribers and users of each company's online services."