Government mulls Telekom Austria break-up

Christoph Matznetter, the Austrian government’s economic spokesman, has raised the possibility of spinning off the fixed-line network infrastructure business of Telekom Austria, the country’s incumbent telco, which is partially owned by the state (27.37 per cent).

Speaking to Die Presse over the weekend, Matznetter outlined a plan whereby Telekom Austria would still be able to offer fixed-line services, but the ownership of the network would be held by an entity as yet to be specified.

The fixed-line business has long been a drag on the Telekom Austria Group (which also offers mobile services). One of the problems has been the inability of Telekom Austria to trim its ‘civil servant’ status workforce so as to become more competitive; civil servants are almost impossible to fire in Austria.

A break-up of Telekom Austria’s fixed-lime business would also put the incumbent’s fixed-line competitors on a level playing field as they, like Telekom Austria, would have the same terms and conditions of network access. In Austria, as in many other markets, fixed-line competitors frequently complain of unfair treatment on wholesale network access when the incumbent both owns the network and offers retail services.

For Q1 2009. Telekom Austria reported net income of €85.3m, a 34.2 per cent year-on-year decline. Revenues for the three months ended 31 March fell to €1.2bn, down from €1.26bn in the same period a year earlier. CEO of Telekom Austria, Hannes Ametsreiter, said: “The decline in revenues in the first quarter of 2009 is mainly due to lower revenue generation in the fixed line segment, which was due to lower wholesale revenues and the disposal of subsidiaries.”

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