Hutchison’s Orange Austria Offer Wins European Union Approval

Hutchison Whampoa Ltd. (13)’s planned 1.3 billion-euro ($1.7 billion) purchase of wireless carrier Orange Austria won European Union approval after the Hong Kong company agreed to divest radio spectrum and offer network access to new rivals.

Hutchison will cede spectrum to a new market entrant and offer wholesale access to its network for as much as 30 percent of its capacity for as many as 16 so-called mobile virtual network operators without their own infrastructure, the European Commission said in an e-mailed statement yesterday.

“The risks posed by more concentration in national mobile telephone markets cannot be ignored,” EU Competition Commissioner Joaquin Almunia said in an e-mailed statement. Hutchison’s commitments “ensure that competition is preserved so that Austrian consumers continue to enjoy the benefits of innovation and fair prices.”

Hutchison, controlled by Hong Kong billionaire Li Ka-shing, agreed in February to combine its Three unit with Orange Austria to create the Alpine country’s third-biggest mobile operator. Orange is currently owned jointly by France Telecom SA (FTE) and Mid Europa Partners.

Hutchison can’t complete the Orange deal until it has struck one access deal, the EU said. The company signed such a deal with Liberty Global Inc.’s UPC Austria in October.

‘4G’ Services

Jan Trionow, the chief executive officer of Hutchison’s 3G Austria unit, said the company will now benefit from larger scale and efficiencies to roll out long-term evolution, or 4G wireless communication technology, within two years.

A linked transaction, the proposed sale of Orange’s discount Yesss! brand to Telekom Austria AG (TKA) for 390 million euros is “an integral part” of the Hutchison bid for Orange Austria, Trionow said. Austria’s cartel court approved the Yesss! deal last month. Austria’s competition agency has until Dec. 27 to object to the approval.

Such an appeal would “undermine the entire transaction and stand in the way of the benefits that will quickly flow from it in terms of scale, innovation and new network roll-out, competition by new mobile virtual network operators and the new market entry that are part of the package approved by the commission,” Trionow said in an e-mailed statement.

Without the commitments, Hutchison’s takeover of the Orange unit would have reduced the number of Austrian operators from four to three with the combined firm facing rivalry from Telekom Austria AG and Deutsche Telekom AG (DTE)’s T-Mobile unit, the EU said.

T-Mobile Austria said last month that a successful merger of Three and Orange would -- without the spectrum offer -- leave T-Mobile, Austria’s second-biggest wireless company, the only operator without spectrum for faster services using long-term evolution technology.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net;

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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