German telecoms giant Deutsche Telekom is set to take over one of the largest internet service providers in France.

In a share swap, Deutsche Telekom will get 99.9% of Club Internet, which will in exchange get 6.5% of T-Online, Deutsche Telekom's internet service provider.

With a combined 4.6m subscribers, the takeover creates a European internet giant.

More takeovers are likely, hinted Deutsche Telekom chairman Ron Sommer.

"We want to make the already largest European internet provider step by step the first truly pan-European online provider. The partnership proves that we are serious about this. Further steps are to follow," Mr Sommer said.

T-Online float

T-Online is expected to be floated next month.

Acquiring Club Internet could boost the valuation of the 10% T-Online stake that Deutsche Telekom expects to float, analysts said.

At present, most of T-Online's users are in Germany and Austria.

Its leading rival is AOL Europe, whose user base is spread across Europe.

French presence

Deutsche Telekom already has a presence in the French market. It owns telecoms company Siris.

Mr Sommer added that Siris will be closely co-operating with Club Internet.

Analysts say that Deutsche Telekom was under pressure to grow by acquisition following Vodafone AirTouch's takeover of Mannesmann.

Under the agreement with Club Internet's parent company, Lagerdere, its media division will provide a broad range of content the service.

Lagardere has interests spanning tactical missiles to Elle magazine.