UPDATE 1-T-Mobile lodges appeal over Austrian telecom merger

Wed Jan 2, 2013 6:53am EST

* Wants injunction to block frequencies transfer

* Potential impact on broader Hutchison-Orange Austria deal (Adds court confirmation, background)

VIENNA Jan 2 (Reuters) - T-Mobile Austria has appealed against the allocation of radio frequencies that will result from Hutchison Whampoa's takeover of Orange Austria , in a move that could derail the 1.3 billion euro ($1.7 billion) deal.

A source familiar with the matter told Reuters last month the Deutsche Telekom unit planned the appeal over fears that rivals will have a headstart of up to a year in building next-generation networks.

The ability to build an LTE (long-term evolution) network with data speeds up to 10 times those now available will be a key competitive advantage in Austria's telecoms market.

The country's four operators are engaged in a price war, fighting over a population of just 8.4 million with all-inclusive, no-strings offers from 7 euros ($9) per month.

T-Mobile said on Wednesday it lodged an appeal on Monday with Austria's higher administrative court against the decision of the telecom control commission, the TKK, for the transfer of frequencies that will accompany the merger.

It asked for the transfer to be put on hold while its case was being heard and expects the court to decide within days whether to grant an injunction in the case which, it said, could last until March or April.

A court spokesman said it had received the appeal.

T-Mobile wants an injunction that could delay or even derail Hutchison's agreed takeover of France Telecom's Orange Austria unit, which will reduce the number of mobile operators in the country to three from four.

The merger was thought to have overcome all regulatory hurdles last month after almost a year of negotiations when the European Commission approved it and Austria's competition authority dropped its opposition.

The frequencies T-Mobile will end up with are not adjacent, unlike those of Hutchison and the biggest operator, Telekom Austria, meaning it will not be able to begin building an LTE network until after a spectrum auction next year.

T-Mobile said it would cost about 90 million euros additional investment and annual operating costs in the tens of millions to handle rising data demand via standard UMTS frequencies.

Telekom Austria is set to acquire frequencies from Orange as part of a 390 million euro agreement to acquire budget mobile brand Yesss, which is linked to the Hutchison-Orange deal.

If all the necessary approvals are not received by the end of January, Telekom Austria has an option to get out of the Yesss deal, a transaction it can ill afford as it has already cut its dividend payout to conserve cash.

Telekom Austria declined to comment.

Deutsche Telekom shares rose 1.7 percent, Orange Austria part-owner France Telecom was up 1.9 percent and Telekom Austria gained 2.5 percent by 1130 GMT in a broad share rally. ($1 = 0.7585 euro) (Reporting by Angelika Gruber and Michael Shields; Editing by David Holmes and Dan Lalor)

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