'Unrealistic' AOL to buy its way into Europe

European ISPs will be the chief targets of AOL Time Warner's ambitious European expansion plans - but analysts are questioning the wisdom of that strategy.

The expansion plans were laid out this week by company chairman Steve Case on a visit to London. The US firm is to expand its international business from 17 per cent to 50 per cent of its revenue through the acquisition of European businesses. Chief among AOL Time Warner's objectives will be to secure a large European ISP, an industry already rapidly consolidating. So far, AOL has failed to take a lead in any of the major European markets, trailing others in the UK, France, and Germany. Analysts branded Case's comments as laudable - but probably unrealistic. Jeffrey Mann, vice-president at Meta Group said to meet Case's claim AOL would be after a high-profile ISP or portal acquisition: "You have to ask if they could go for Terra Lycos, if they wanted to be spectacular. But if they were deemed too big, Freeserve, T-Online or various Bertelsmann portal properties could all be in their sights," he said. Olivier Beauvillain, analyst at Jupiter MMXI, said AOL's options are limited by the consolidation that has already taken place: "Freeserve has already merged with Wannadoo, World Online with Tiscali and T-Online is still very close to Deutsche Telekom. They would be much better off looking to partner with a media company or telco, than actually try and buy their way in." Tim McElgunn, senior research analyst with US-based Stratocast Partners, said that while AOL's size and wealth enables it to theoretically purchase whatever it wants, the lack of independent players in Europe makes it difficult to pinpoint a target. He added: "Most of the people they would want to partner with they are already competitors of in the US. You have to ask if they are able to make their domestic and international businesses discreet enough to be able to find anyone." AOL Time Warner was unable to provide anyone to comment.