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Slovenia Business Week no. 23: Telekom Buys Top Search Engine

Telekom said the acquisition was in line with its strategy of strengthening its position in internet services

Telco Telekom Slovenije has acquired a 75% share in the company behind Slovenia's leading internet search engine, Najdi.si. The company paid EUR 8.55m for the majority stake in Interseek, the company announced in its press release on Wednesday, 13 June.

Telekom signed the deal with Interseek, which also operates search engines in Croatia, Serbia, Macedonia and Bosnia-Herzegovina, in Ljubljana on Wednesday, 13 June. Telekom said the acquisition was in line with its strategy of strengthening its position in internet services.

Najdi.si tops the list of Slovenia's most popular internet sites, as it is used by 800,000 Slovenians or 85% of all internet users, Telekom added.

According to Telekom, the acquisition is a continuation of the restructuring of operations and integration of content. The company also wants to provide fresh content to its recent acquisitions on the markets of the former Yugoslavia, including internet service providers in Kosovo and the Republic of Srpska.

Telekom chairman Bojan Dremelj said at the signing ceremony that the takeover was a logical development given Telekom's development strategy and goal to offer the best services in one place.

Telekom will register the acquisition with the Competition Protection Office, which must give its approval to confirm the deal.

Meanwhile, the director of the company operating the Slowwwenia.com portal believes Telekom is too late with the purchase. According to Aljosa Domijan, Google is well on the way to blowing out the local competition, including in Slovenia, in search engines.

"Experience in other European countries shows that Google has won everywhere, which is why I expect the same thing will happen here," Domijan told STA. He added that Google was reportedly looking to open a branch office in Slovenia, while the future for the local competition was in niche searches.

Domijan nevertheless believes that Telekom got a very good price for Interseek. "Compared to abroad...this is a very good price for the buyer. I think the company was sold too cheaply."

Professor at the Ljubljana Faculty of Social Sciences and the head of a national survey on internet use Vasja Vehovar praised the acquisition. "The first impression...is that this is positive, as it increases the chances of retaining a Slovenian brand in the region," he said.

According to Vehovar, the acquisition increases Telekom's chances of becoming a strong player in the region. "It is a fact that Najdi.si is one of leading local search engines in terms of market shares. But on the other hand the expansion of Google's services makes it much more difficult to form a strategy for the future," he said.

The takeover of Interseek is the latest in a string of mergers and acquisitions involving Telekom of late. Last week the telco bought the internet unit of Slovenian telecommunications company Perftech and at the end of April it signed a deal with US company Verizon International on the acquisition of 50% of Gibraltar telco Gibtelecom.

Meanwhile, Najdi.si, which finished 2006 with revenues of around EUR 3.5m and a profit of EUR 558,000, was reportedly being eyed recently by Austrian publishing group Styria.

Interseek said that the change of ownership would not lead to lay-offs at the company that employs 65 people.

The 25% share not bought by Telekom remains in the hands of the company Noviforum and its partners.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency