* Cartel court clears Yesss deal without conditions
* Hutchison says now expects EU approval for Orange buy
* Telekom Austria shares fall 2 percent
(Adds comments from Hutchison, analyst, background)
By Georgina Prodhan and Angelika Gruber
VIENNA, Nov 27 Telekom Austria got the
go-ahead to buy Orange Austria's discount mobile brand
Yesss, paving the way for a long-awaited consolidation of
Austria's telecoms market.
The Yesss deal hinges on a 1.3 billion euro ($1.7 billion)
agreement for Hutchison Whampoa to buy Orange Austria,
which was signed in February and is likely to be approved soon
by the European Commission after a prolonged investigation.
Austria's cartel court said on Tuesday it had
unconditionally approved the Yesss deal. It could still be
challenged by the Austrian competition regulator, the BWB,
within four weeks.
Hutchison 3G (3) said it now expected the European
Commission to approve its takeover of Orange Austria, which is
seen as a test case for consolidation elsewhere in Europe. The
commission has until Dec 21 to make up its mind.
Telekom Austria, which slashed its dividend in September to
ward off a cash crunch, will pay 390 million euros for Yesss, a
high price for the 740,000 mobile customers it will gain, but
one it judged worth paying to help consolidation.
Shares in the company fell 2.07 percent to 5.16 euros by
1303 GMT, underperforming a 0.59 percent weaker European
"The cash and the leverage situation are more serious for
Telekom Austria than market repair," said Andrew Hogley,
telecoms analyst at Espirito Santo.
"The damage has been done in the Austrian market and even
with consolidation EBITDA is going to fall a long way next
year," he said. "If the deal had been blocked you could also
have argued it was a small positive."
The Austrian cartel court said it was not concerned that the
deal would raise Telekom Austria's market share to 47 percent
from 45 percent now.
"Telekom would still not be considered market dominant after
the merger, because it would not currently obtain a pre-eminent
market position in this highly competitive market," it said.
Austria is seen as a test case for other European countries
where investment bankers and operators are also hoping for a
reduction from four to three carriers to ease price competition,
including Italy, Spain and Denmark.
The Commission briefed national competition regulators on
the Hutchison-Orange deal on Tuesday, in a sign that it had
decided to approve it.
Austria has Europe's cheapest all-inclusive mobile deals,
starting at 7 euros a month with no strings attached, and its
four operators fight over a population of just 8 million,
one-tenth of that of Germany, which has the same number of
The Commission's decision to carry out an in-depth
investigation of the planned merger of the country's two
smallest operators raised eyebrows, and is widely believed to
have been motivated by concerns it would be seen as a precedent.
Even combined, Hutchison and Orange would have only 24
percent of the market, behind Telekom Austria, and T-Mobile
with about 30 percent.
While Austria differs from its neighbours because of its
small size and highly competitive prices, implications for other
European markets should not be ruled out, telecoms analysts at
BNP Exane Paribas wrote in a note last week.
"We believe that politicians in Europe, both at the EU and
at the national levels, have increasingly come to the conclusion
that Europe needs more investment in telecom networks, both
fixed (fibre) and mobile (4G) - or it risks seriously lagging
other regions in the world in terms of super-fast broadband,
particularly compared to the US," they wrote a note last week.
"The green light for some limited in-market consolidation
deals could create a better environment for operators to
($1 = 0.7717 euros)
(Additional reporting by Michael Shields; Editing by