Hutchison grows anxious over Orange Austria deal progress

Hutchison Whampoa has expressed frustration with what it calls the "painfully slow" progress being made by the European Commission in coming to a decision over the company's planned €1.3 billion acquisition of Orange Austria.

Fok

According to a report by Reuters, Hutchison's managing director, Canning Fok, said further demands being made by the Commission are unacceptable. The company has already agreed to open up its mobile network in Austria to allow a new mobile operator to enter the market.

Orange Austria is also selling its Austrian discount brand Yesss! to Telekom Austria as a condition of the merger. "As it drags on, it affects our business case for the acquisition," Fok said, accordng to Reuters

Hutchison already owns 3 Austria, and the acquisition of Orange Austria would reduce the number of mobile operators in the highly competitive market from four to three.

Although Austria is a small country, the deal is being seen as a test case at European level and is being closely watched by other operators contemplating similar moves.

"Everyone in the sector agrees on the need for consolidation, but executives have been terrified that competition authorities won't allow it," Michael Grenfell, a partner specialised in antitrust at law firm Norton Rose, told Reuters. "The outcome in the Austria case will tell us if mergers to go from four to three players in a market can ever be allowed, and quite possibly when they can be allowed."

The deal is an important one for Hutchison, which remains a small player in Europe almost 10 years after it launched the 3 brand and wants to expand its market share. The failure of the Austria deal could have serious repercussions for its strategy.

"Hutchison wants to be predator instead of prey, but if regulators tell them they can't buy their way to bigger scale, then they might have to reconsider," Thomas Wehmeier, an analyst at Informa Telecoms & Media, told Reuters.

For more:
- see this Reuters article
- see this separate Reuters article

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