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Hutchison awaits OK from EC on Orange deal

Operator poised to expand 4G network but first needs approval for its takeover of Orange

PUBLISHED : Wednesday, 26 September, 2012, 12:00am
UPDATED : Wednesday, 26 September, 2012, 3:33am

Hutchison Whampoa, whose purchase of mobile network operator Orange Austria is under review, will accelerate 4G network development in the country once the European Commission approves the €1.3 billion (HK$13 billion) deal.

Li Ka-shing's flagship conglomerate yesterday said it was hopeful of "a positive outcome", despite the EC's formal objection last Friday to the takeover by Hutchison 3G Austria of the larger Austrian carrier owned by France Telecom and private equity investment firm Mid Europa Partners.

The deal, which was announced in February, marks Hutchison Whampoa's first merger and acquisition initiative in Europe's telecommunications sector. The EC's main concern is the reduction in mobile network operators in Austria to three from four after the operations of Hutchison 3G Austria are merged with those of Orange Austria.

Hutchison Whampoa said the merger would "ensure the investment needed to guarantee" the early deployment in Austria of a high-speed 4G network based on the technology called long-term evolution (LTE). Theoretical online download speeds of up to 100 megabits per second (Mbps) are provided by 4G LTE networks. The fastest 3G networks run up to 42Mbps.

Discussions were also under way between Hutchison Whampoa and two mobile virtual network operators (MVNO) seeking to enter Austria. A MVNO leases capacity from an existing mobile network operator so it can do business in a market under its own brand.

"Instead of opposing the merger of the two smallest operators in Austria, the commission should allow it to proceed and facilitate the entry of new, competitive MVNO players in the Austrian market," said Canning Fok, the group managing director of Hutchison Whampoa.

Post-merger, Hutchison 3G Austria would have a 22 per cent market share, while larger carriers Mobilkom Austria and T-Mobile Austria have a combined 78 per cent share.

According to market research firm Wireless Intelligence, there were 812 MVNOs worldwide as of May 31. Europe is home to about two-thirds of those operators.

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