Tele2, UPC interested in H3G MVNO tie-up

2 Aug 2012

Swedish telecoms giant Tele2 is weighing a return to Austria’s mobile market if rival Hutchison 3G Austria (H3G) opens up its network as part of a deal to merge with Orange Austria, WirtschaftsBlatt reports. Tele2 Austria CEO Alfred Pufitsch indicated that his company was considering buying capacity from the enlarged H3G, as it seeks to expand its product portfolio. Previously, in 2007 Tele2 sold its mobile virtual network operator (MVNO) business to Mobilkom (now A1 Telekom Austria) for EUR7 million (USD9.9 million) on a cash and debt free basis. At the time Tele2’s then-CEO, Lars-Johan Jarnheimer, said that the sale was due to fierce competition in the domestic market: ‘Our strength in Austria lies within our infrastructure-based fixed and broadband operation. However, the current market environment leaves us little room for a profitable and sustainable MVNO operation.’ Interestingly, Pufitsch also indicated that Tele2 may consider bidding for Long Term Evolution (LTE)-suitable frequencies in a supplementary spectrum auction tentatively scheduled for this autumn. He said: ‘As a global company, we are focused on mobile. For us, it is not about selling SIM cards as cheaply as possible but about offering a comprehensive service.’ Meanwhile, Tele2’s fixed line rival UPC Austria has also admitted an interest in launching as an MVNO, telling the business daily: ‘We will follow the discussion around MVNO operations in Austria closely.’

As previously reported by TeleGeography’s CommsUpdate, last month European Union (EU) regulators suggested that they are willing to allow Hutchison Whampoa’s H3G Austria unit to take over France Telecom-Orange’s Austrian subsidiary, as long as the combined entity allows other local operators to access its network as MVNOs. However, the EU solution fails to address the chief objection from Austria’s federal competition authority, Bundeswettbewerbsbehorde (BWB), which objects to a clause in the EUR1.40 billion (USD1.87 billion) deal which would see H3G sell MVNO Yesss! to A1 Telekom Austria immediately after the transaction; the transfer of 750,000 Yesss! subscribers would allow Telekom to boost its market share to around 47%. The Austrian wireless market is currently home to more than a dozen well known MVNOs and airtime resellers, including Schwarzfunk, Yesss!, eety and Red Bull Mobile (formerly aonMobil).

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