BERLIN -- German telecommunications giant Deutsche Telekom has agreed to take a $503 million controlling share in the Kirch Group's Beta Research subsidiary, according to German daily Sueddeutsche Zeitung.
Telekom will reportedly purchase a 51% share in Beta Research, Kirch's technology and software development arm that manufactures the widely used d-box set-top decoder.
Neither Telekom nor Kirch were available for comment over the weekend. On Friday, a Kirch spokeswoman said the two companies were still in negotiations.
It's the first time the Kirch Group has sold a majority stake in a key unit of its media conglomerate. The two companies are weighing the possibility of floating Beta, according to the report.
Telekom also plans to bring parts of its Media Service business into Beta, which will be redubbed Tele Research, Sueddeutsche reported.
The newspaper estimates that with the further development of the d-box and other cable and Internet business, Beta could post annual sales of about $1.76 billion and profit of about $176 million within a few years.
The European Union has said it would examine whether the deal infringes upon antitrust regulations.
Telekom is Germany's biggest cable operator, and its T-Online unit is Europe's largest Internet service provider with 4.2 million customers.
Kirch owns TV broadcasters SAT.1, ProSieben, Kabel 1 and DSF and Germany's only pay TV service, Premiere World.
Telekom is also about to finalize the sale of its regional cable networks but still has a number of cable frequencies leased long-term to Kirch for Premiere World. The former telecommunications monopoly had also agreed to make the Beta Research d-box the standard decoder, which had left analysts wondering whether the cable network's new owners would have to abide by that agreement. With Telekom as Beta Research's majority shareholder, the new buyers will likely be forced to take the d-box.
Contact Ed Meza at
ed.meza@mannaa.de