Telekom said it will sell as many as 100 million shares in T-Online, or less than 10 percent of the total. The Bonn-based phone company didn't name a price range, and chief executive Ron Sommer declined to be drawn on speculation that the unit is worth 20 billion euros ($20.1 billion).
With 4.2 million subscribers, T-Online is Europe's largest Internet service provider, beating America Online Europe, a joint venture of America Online and Bertelsmann.
Deutsche Telekom wants to expand T-Online outside of Germany and Europe and transform itself into a global telecommunications company, a goal it has said would require a U.S. acquisition. The company declined to name potential takeover targets or countries where acquisitions are planned.
"We will continue to make Internet acquisitions with Internet money and wireless phone acquisitions with wireless phone money," Sommer said at a press conference. Telekom, which is only active in Germany and Austria, said it also plans to sell shares in its mobile phone unit, T-Mobil, this fall or winter.
Dresdner Kleinwort Benson and Goldman Sachs Group will manage the T-Online sale. ABN Amro is also an adviser, Telekom said.
Sommer questioned America Online's proposed $156 billion purchase of Time Warner and indicated that T-Online isn't shopping for a content company in a similar move.
"We didn't start with fun and games (like AOL), we started with the small office, home office," Sommer said.
The unit had about 900 million marks in sales last year and posted "a solid zero" profit, Sommer said. If more acquisition funds are needed, he said he'd consider listing up to 51 percent of the Internet company.
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