August 15, 2012 / 5:25 PM / 7 years ago

UPDATE 1-Hutchison says progress slow on Orange Austria deal

* Hutchison says progress on Orange Austria “painfully slow”

* MD Fok says European Commission’s demands go too far

* Delay is hurting business case for acquisition (Adds quotes, background)

By Georgina Prodhan

VIENNA, Aug 15 (Reuters) - Hong Kong conglomerate Hutchison is making “painfully slow” progress in persuading the European Commission of its case to take over telecoms operator Orange Austria, which it said was hurting its business case for the acquisition.

Hutchison’s telecoms arm has agreed to open up its mobile network in Austria to allow a new mobile operator to enter the market, to allay concerns about reduced competition as a result of the 1.3 billion-euro ($1.6 billion) merger.

But Hutchison’s Managing Director Canning Fok said on Wednesday the Commission was pushing the company to give better terms to the other party, with which it has already signed a deal. He said this demand was unacceptable.

“This is one step too far for the Commission,” Fok told journalists by telephone. “The remedies they’re requiring are unsustainable from our point of view.”

The agreed merger of Austria’s two smallest players would reduce the number of mobile operators in the country of 8 million to three from four, and some observers are considering the case a test for other European markets.

The European Commission, the executive arm of the European Union, has embarked on a phase-two, in-depth investigation of the proposed merger, while Austria is probing a related sale of a budget mobile brand by Orange to Telekom Austria.

Hutchison 3G argues that the combined company would still have less than a quarter of the market, behind incumbent Telekom Austria and Deutsche Telekom’s T-Mobile, and has questioned the need for an in-depth probe.

“We should not be used as a test case,” said Fok. “Progress is very, very slow. I would use the word ‘painfully’ slow.”

“As it drags on, it affects our business case for the acquisition,” he added. ($1 = 0.8142 euros) (Reporting by Georgina Prodhan; Editing by Helen Massy-Beresford)

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