By Vanessa Mock
BRUSSELS--In a case likely to encourage more consolidation
efforts by Europe's mobile operators, Hutchison Whampoa Ltd.
(HUWHY) was given the green light Wednesday for its $1.7 billion
takeover of Orange Austria after it offered major concessions to
European Union regulators.
The European Commission had launched an in-depth probe into the
H3G-Orange deal, signed in February, amid concerns it would reduce
the number of mobile operators in Austria from four to three.
Hutchison won approval to combine its own Austrian operation,
3Austria (H3G), with Orange Austria, after it pledged to divest
radio spectrum and related rights, and agreed to allow at least one
wholesaler to access its network. The combined carrier would still
only have a market share of 25%, making it the smallest carrier in
Austria and putting it behind Telekom Austria AG and Deutsche
Telekom's T-Mobile.
The decision is conditional on full compliance with the
commitments undertaken.
"The commitments proposed by H3G ensure that competition is
preserved so that Austrian consumers continue to enjoy the benefits
of innovation and fair prices," the EU's Competition Commissioner,
Joaquin Almunia, said in a statement.
The ruling is being watched closely by other European nations
such as Italy, Denmark and Spain, where operators are also hoping
for a reduction from four to three carriers to ease price
competition, though Mr. Almunia warned of the "risks" posed by more
concentration in national mobile telephony markets.
"European consumers increasingly use their mobile phones to
upload and transfer data and new mobile data services are a major
contribution to growth," he said. In a related deal, the decision
by the European Commission also paves the way for Telekom Austria
to buy Yesss, Orange Austria's mobile discount brand.
According to the deal struck with EU regulators, H3G will make
provision to enable a new entrant to enter the Austrian mobile
market next year. The new mobile network operator, MNO, will have
the right to acquire spectrum not only from H3G but also at an
auction planned in 2013 by the Austrian telecom regulator, the
Commission said.
H3G agreed to provide wholesale access to its network for up to
30% of its capacity to up to 16 mobile virtual network operators,
or MVNOs, within a decade. "This will enable MVNOs to offer mobile
telecommunications services to end-customers in Austria at
competitive terms and conditions," the Commission said.
"The clearance shows that remedies can be found even in
so-called "four to three" mergers which reduce the number of
national players to levels which traditionally raise competition
issues, at least by reference to corporate headcount," said Suzanne
Rab, a partner at London-based law firm King & Spalding. She
said the fact that the case had involved smaller operators also
played a role, helping to secure clearance.
"It will be interesting to see what spur this decision gives to
consolidation in the telecoms sector in other concentrated national
markets. Much will depend on how willing the parties are to offer
concessions and whether remedies such as spectrum divestments and
access commitments are credible."
Write to Vanessa Mock at vanessa.mock@dowjones.com
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