Report: Hutchison nears deal to buy Orange Austria

Hutchison Whampoa is close to finalising a deal to buy Orange Austria from France Telecom and Mid-Europa Partners, with multiple media reports estimating that the deal would value the Austrian mobile operator at about €1.4 billion.

According to Austrian newspaper Wirtschaftsblatt, which cited unnamed sources, the deal will be officially announced by this Friday. Hong Kong-based Hutchison Whampoa already owns 3 Austria, and the deal would combine the operations of the third and fourth-largest mobile operators in Austria. Reports from both Bloomberg and Reuters, which cited unnamed sources, also indicated a deal between Hutchison and Orange Austria is imminent, though those reports said the deal could be announced in the coming days or weeks.

Wirtschaftsblatt reported that 3 Austria would then sell its stake in Orange low-cost operator Yesss to Telekom Austria for between €300 million and €400 million, while Telekom Austria would also gain 3G spectrum and some base stations from Orange, the newspaper added.

France Telecom currently holds a 35 percent stake in Orange Austria with Mid-Europa Partners owning a 65 percent stake. According to Bloomberg, the French operator could receive around €100 million in cash from the sale of its stake. This move would effectively end its activities in Austria and forms part of its ongoing strategy to review its portfolio and exit non-growth mature markets. The operator has already agreed to sell Orange Switzerland to Apax Partners for €1.6 billion, and has expressed interest in selling its minority stake in Portuguese operator Sonaecom.

Austria has an extremely mature and competitive mobile market, and all four mobile operators including Telekom Austria's A1 and T-Mobile Austria face a fierce battle to maintain subscriber numbers. Latest measures include a focus on "worry-free" unlimited mobile data usage with aggressive marketing messages. Bloomberg noted that the enlarged company would have an increased ability to compete in the country of just 8.2 million people.

"Looking across Hutchison's European footprint, they are not going to have too many opportunities like this in Austria," Nick Brown, an analyst at Espirito Santo Investment Bank in London, told Bloomberg. "It's always been subscale in Europe, and this is a way for it to gain scale in one of its markets."

Hutchison also owns operators under the 3 brand in the UK, Ireland, Italy, Sweden and Australia. Meanwhile Telekom Austria said Ronny Pecik's RPR Privatstiftung now holds 20.118 percent of the company through shares and options, according to Bloomberg.

For more:
- see this Wirtschaftsblatt article (translated via Google Translate)
- see this Bloomberg article
- see this Reuters article
- see this separate Bloomberg article

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