UPDATE 1-Hutchison, Orange Austria deal faces full EU probe

Thu Sep 13, 2012 8:21pm IST

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* EU objections could force Hutchison to offer more concessions

* Hutchison last month proposed to let rivals use its Austrian network

* EU Commission decision due by Nov. 30

By Foo Yun Chee and Georgina Prodhan

BRUSSELS/VIENNA, Sept 13 (Reuters) - EU regulators object to Hutchison 3G's agreed 1.3 billion euro ($1.7 billion) takeover of France Telecom's Orange Austria and will carry out a full probe, Hutchison said on Thursday, in a move likely to force more concessions to win approval.

The European Commission, which has been examining the takeover since June, has said it is worried the deal would cut the number of telecoms operators in Austria to three from four and lead to higher consumer prices. The commission declined to comment On Thursday.

The case is being watched closely by telecoms executives and investors for how it might apply to bigger markets such as Spain, Italy and Germany - which also have four mobile operators and are seen as in need of consolidation.

Hutchison, Austria's third-largest mobile operator and a unit of Hutchison Whampoa, which is controlled by Hong Kong billionaire Li Ka-shing, offered last month to let rivals use its mobile network to allay regulatory concerns.

The EU executive subsequently sought feedback from rivals and other parties.

Hutchison said some respondents were negative on the deal and that the Commission would broaden its investigation into the proposed merger, confirming what a source earlier told Reuters.

H3G Austria's Chief Executive Jan Trionow said in an email Hutchison would work with the EU watchdog but that further concessions would erode the benefits of the deal for consumers and may further boost the bigger operators.

The EU competition watchdog has set a Nov. 30 deadline for its decision.

Sources familiar with the matter have told Reuters that Hutchison's offer included signing a memorandum of understanding to open up its network to cable operator UPC, which is owned by Liberty Global.

Some observers said the intense regulatory scrutiny is surprising for a deal between a country's third and fourth telecoms operators that would a combined group with just a 22 percent market share and in a country with 8.2 million people.

Telekom Austria is the market leader, followed by Deutsche Telekom unit T-Mobile.

EU regulatory concerns about losing a fourth player in Greece torpedoed Vodafone's plan to merge its Greek unit with rival Wind Hellas in February, a source told Reuters at the time.

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