Hutchison Vows Austrian 4G Start to Gain EU Deal Approval

Hutchison Whampoa Ltd., seeking to buy Orange’s Austrian unit, would start next-generation mobile-phone services within two years and tweak previous concessions to gain European Union approval for the purchase.

Hutchison, which agreed to buy Orange Austria for 1.3 billion euros ($1.7 billion), will “make improvements” to its plan to allow at least two companies to use Hutchison’s systems as a mobile virtual-network operator, its Austrian Chief Executive Officer Jan Trionow told journalists in Vienna today. He called on the EU to approve the purchase even after the European Commission told the company last week it is concerned the acquisition may diminish competition in Austria.

“The Commission cannot expect us to make further concessions that go to the commercial core of the business,” Trionow said. “We believe the Commission can be convinced that we should focus on some technical improvements of the MVNO remedies and get clearance on that basis.”

MVNOs don’t own their own network and usually rent capacity from existing operators. EU and Austrian regulators extended an investigation into the Orange Austria purchase in June. Hutchison 3G Austria is the smallest wireless operator in the country of 8.2 million people, where it competes with Orange, Telekom Austria AG and Deutsche Telekom AG’s T-Mobile. The company says the planned Orange purchase will help consumers because it creates viable competition.

‘Competitive Strength’

“The key thing we think is important for this merger and its pro-competitive effect is our competitive strength after the merger,” Trionow said. Additional restrictions by antitrust authorities are “at the end of the day weakening our capability to compete,” he said.

Hutchison, controlled by Hong Kong billionaire Li Ka-shing, agreed to buy Orange Austria in February. Austria’s competition authority is separately probing a side deal to the Orange purchase, in which Telekom Austria plans to acquire about 700,000 clients using Orange via the Yesss! discount brand. Orange Austria is 35 percent owned by France Telecom SA and 65 percent by U.K. private-equity firm Mid Europa Partners.

Hutchison shares fell 0.3 percent to HK$73.60 in Hong Kong trading today.

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