Hutchison sees little room for concession on Orange Austria deal
VIENNA, Sept 24
VIENNA, Sept 24 (Reuters) - Hutchison Whampoa said it saw little scope for more concessions to gain Brussels' approval of its agreed 1.3 billion euro ($1.7 billion) takeover of Orange Austria, as it already plans to offer network access to rivals at cost price.
The planned merger has attracted close scrutiny from the European Commission, as it would cut the number of mobile operators in Austria to three from four - which the Commission is reluctant to allow for fear of reducing consumer choice.
Hutchison argues that Austria is a special case, as the combined company would still have a market share of below a quarter in a small market of just over 8 million inhabitants.
But the Commission, which has a tough record in cracking down on perceived anti-competitive practices by technology giants such as Microsoft and Intel, has opted for an in-depth investigation of the proposed merger.
Hutchison has offered to open up its network to new competitors to compensate for any reduction in Austrian consumer choice, and already has cable operator Liberty Global's UPC and Sweden's Tele2 ready to sign up.
Hutchison 3G's Austrian Chief Executive Jan Trionow told journalists the company could go no further in cutting the price of access, which was already equal to Hutchison's own costs, although progress could be made on some technical points.
"There's only so much that we can do," he said, adding that discussions with the Commission were continuing and that he was still optimistic of a positive outcome. The Commission says it will reach a decision by the end of November.
Canning Fok, managing director of the Hong Kong-based Hutchison group, said the merger agreement with France Telecom's Orange Austria was due to expire not long after. "I can have all the patience in the world but our agreement expires at a certain point," he said.
The Commission's decision is being closely watched by operators and investment bankers in other European countries, who will take it as a signal for other markets.
Hutchison argues that the proposed merger would effectively increase consumer choice by creating a stronger competitor to Telekom Austria, which has the biggest market share, and second-placed T-Mobile, a unit of Deutsche Telekom .
Trionow pledged that Hutchison would build a next-generation, LTE network within two years of the Orange deal coming into effect. LTE is capable of speeds of about 10 times those of current, 3G networks.
LTE services are available in a few countries including Norway, the United States and Japan. Networks cannot be built in Austria until after an auction of the necessary frequencies, which has been delayed by the merger uncertainty. ($1 = 0.7699 euros) (Reporting by Georgina Prodhan; Editing by Pravin Char)
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