Hutchison says EU supports its Orange merger remedy

VIENNA Thu Aug 23, 2012 7:40am EDT

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VIENNA (Reuters) - Hong Kong conglomerate Hutchison Whampoa (0013.HK) and the European Union have agreed the basic principles of a competition concession that would allow Hutchison's Austrian telecoms unit to take over Orange FTE.PA Austria, Hutchison said.

Hutchison 3G, or "3" has proposed opening up its mobile network to third parties, letting new players enter the market if it succeeds in its deal to buy Orange Austria, which would cut the number of operators in Austria to three from four.

"3 cannot reveal any details at the moment because the process is still ongoing and confidential, but can confirm that a model has been basically agreed with the Commission and is now being tested in the market," it said in a statement on Thursday.

The European Union is carrying out an in-depth investigation of the agreed 1.3 billion euro ($1.6 billion) merger, although the combination of Austria's two smallest players would create an operator with at most a quarter of the market.

Bankers and analysts are viewing the probe in Austria, a country of 8 million people, as a test case for other potential European telecoms mergers that would reduce the number of operators to three from four.

As part of the deal Orange has agreed to sell its budget mobile brand Yesss to incumbent Telekom Austria (TELA.VI).

Hutchison said it had signed a memorandum of understanding to open up its network to a company already active in Austria. Sources familiar with the matter have told Reuters that this company is Liberty Global-owned (LBTYA.O) cable operator UPC.

(Reporting by Georgina Prodhan; Editing by Michael Shields)

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