T-Mobile appeal could derail Austria telecom merger: source

VIENNA Mon Dec 24, 2012 4:39pm IST

A woman talks on her mobile phone as she walks by Telekom Austria headquarters in Vienna November 10, 2008. REUTERS/Heinz-Peter Bader

A woman talks on her mobile phone as she walks by Telekom Austria headquarters in Vienna November 10, 2008.

Credit: Reuters/Heinz-Peter Bader

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VIENNA (Reuters) - T-Mobile Austria plans to appeal against the allocation of radio frequencies that will result from Hutchison Whampoa's takeover of Orange Austria, in a move that could derail the deal.

The Deutsche Telekom (DTEGn.DE) unit fears it will be at a disadvantage to its competitors, who will have a headstart of up to a year in building next-generation LTE networks, a source familiar with the matter told Reuters on Sunday.

The ability to build an LTE network, which will offer data speeds up to 10 times those currently available, will be a key competitive advantage in Austria's hard-fought telecoms market.

The country's four operators are currently engaged in a price war as they fight over a population of just 8.4 million, with all-inclusive, no-strings offers available for as little as 7 euros ($9.22) per month.

The source said T-Mobile planned to file an appeal in the next days with Austria's higher administrative court against the decision of the country's telecom control commission, the TKK, for the transfer of frequencies that will accompany the merger.

A T-Mobile spokesman said he could not comment before a complaint was filed.

T-mobile wants an injunction that could delay or even derail Hutchison's (0013.HK) agreed 1.3 billion euro takeover of Orange Austria FTE.PA, which will reduce the number of mobile operators in the country from four to three.

The merger was thought to have overcome all regulatory hurdles after almost a year of negotiations when the European Commission approved it this month and Austria's competition authority dropped its opposition on Friday.

The frequencies T-Mobile will end up with are not adjacent, unlike those of Hutchison and the biggest operator, Telekom Austria (TELA.VI), meaning it will not be able to begin building an LTE network until after a spectrum auction next year.

Telekom Austria is set to acquire frequencies from Orange as part of a 390 million-euro agreement to acquire budget mobile brand Yesss, which is linked to the Hutchison-Orange deal.

If all the necessary approvals are not received by the end of January, Telekom Austria has an option to get out of the Yesss deal, which it can ill afford as it has already slashed its dividend payout to conserve cash. ($1 = 0.7590 euros)

(Reporting by Georgina Prodhan; Editing by Eric Meijer)

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