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US Internet giant Yahoo! said on Tuesday it had acquired a 15 percent stake in European wireless portal Sonera Zed.

The two firms declined to put a value on the deal, though early speculation has pegged Yahoo's cash outlay for the purchase at around EUR15 million. Moreover, Yahoo! said it has the option to acquire 100 percent of Sonera Zed over the next two years or withdraw from the transaction altogether.

Sonera Zed, a privately held unit of Finnish telecoms operator Sonera, provides entertainment, communication and information services for mobile devices, mainly by text messaging (SMS) and in some markets by Wireless Application Protocol (WAP), via direct relationships with 17 operators in six countries, including Germany, Italy, Malaysia, the Philippines, Suomi and the UK.

Much of what Zed offers consists of ringtones, logos, picture messages, games and chat services, as well as news and entertainment-based content. As of June 2002, the business had an average of 3 million customers per month, who execute approximately 30 million commercial transactions per month, the firm claims.

Yahoo! said it purchased the stake in order to drive "long-term profitable growth," particularly in Europe where consumer use of mobile content is predicted to more than quadruple in revenues in the next four years to more than USD2.9 billion by 2005, Yahoo! pointed out.

Indeed, Yahoo! said the co-branded mobile services the two firms will launch in the wake of the deal will be rolled out in the UK, Germany and Italy initially. The companies also hope to expand their services to additional Yahoo! Europe properties in the future. Alongside the ringtones, picture messages and content services Zed is already providing, Yahoo! said it planned to introduce its instant messaging platform Yahoo! Messenger and Yahoo! Mail to mobile customers in these markets.

"We have identified the mobile space as a potential key driver of growth for our international operations," said Terry Semel, chairman and chief executive officer of Yahoo!, in a statement. "By building a relationship with an established Mobile Value Added Service provider, with a top-quality infrastructure, we believe that we will be well positioned to provide services to consumers that they desire, while also creating a consumer pay platform in Europe."

According to a filing with the SEC in the US, Zed's sales rose to EUR11 million last quarter, from EUR5 million a year earlier. The company's loss before interest, taxes and some other costs last quarter narrowed to EUR8 million from EUR40 million in the same period a year earlier. Sonera is Finland's largest phone company and is in the process of being bought by Sweden's Telia.

© ENN.

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