Austrian mobile mergers under scrutiny

Austria was a hotbed of activity towards the end of this week as the Austrian Federal Competition Authority applied for an in-depth assessment by the Cartel Court of Telekom Austria’s proposed acquisition of MVNO brand YESSS!

Telekom is looking to acquire YESSS from Orange Austria, as Orange itself is bought up by Hutchison 3G (H3G) in a wider deal.

Yet the competition authority has decided to apply for an in-depth assessment of Telekom’s proposed YESSS purchase. “For the benefit of our customers, I am hoping for a swift decision”, Hannes Ametsreiter, CEO of the Telekom Austria Group, commented with regard to the FCA’s decision. Yet that may be wishful thinking, as the in-depth assessment may take up until the end of November.

H3G said the investigation does not in any way prejudge or prejudice the final outcome of the Commission’s consideration of its own transaction and remains confident that the proposed acquisition will be approved.

H3G’s acquisition of Orange Austria is a deal valued at around €1.3bn. The market share of the newly-enlarged operator will reach around 22 per cent of total customers. This is more than double the market share of any other subsidiary of the 3 Group in Europe, but still places the operator a distant third to T-Mobile (~32 per cent) and Telekom Austria (~46 per cent) in a market that has effectively been reduced to just three players.

Austria has long since been one of the most intensely-competitive markets in Europe and with a population of just 8.4 million, such intense competition meant four profitable operators could scarcely be sustained in the long term. Austrian consumers enjoy some of the lowest prices for mobile voice and data services in the world. A mobile broadband plan including 10GB of data can be picked up for less than $12 per month on 3’s network. By comparison, a similar package would set a US consumer back $80 on Verizon Wireless.

To ease the deal through, H3G has already finalised a number of major concessions including the sale of spectrum, towers and customers to Telekom for a sum of around €390m. 3’s net outlay will therefore amount to just €900m.

“The combined business will bring significant consumer and competition benefits in Austria, including the rapid roll-out of a nationwide LTE network capable of operating at full capacity and speed, as well as increased network capacity and coverage for all of 3 Austria’s customers. This will enhance the ability of the combined business to deliver a stronger competitive challenge to other operators in Austria, and also make an important contribution to the achievement of the EU’s Digital Agenda,” said H3G.