Three to compete with Telekom Austria after Tele2 acquisition

By:
Alan Burkitt-Gray
Published on:

Hutchison's Three Austria pays €95m to buy Tele2 Austria and merge it with mobile business

CK Hutchison has bought Tele2 Austria for €95 million to merge it with its existing mobile business, Three Austria. The merged operation will compete in fixed and mobile services with Telekom Austria.

The deal means that Three – locally called Drei Austria – will be able to provide fixed as well as mobile services. Tele2 had 217,000 customers, and the combined company will have four million internet, fixed and mobile customers.

Jan Trionow, CEO of Three Austria, said: “With the takeover of Tele2 Austria, we are closing our last offer gaps and are moving closer to the number one.”

Telekom Austria provides 3.4 million mobile, landline and internet connections, though its revenue, at €2.6 billion is far higher than the combined Three/Tele2 revenue of about €1 billion.

“For the large private companies, we will be the only real alternative to the former monopolist in the future,” said Trionow. “For the private Austrian households, we will ensure that in the future we will continue to offer an Austrian price and competition in the fixed network. We will continue the successful business model of Tele2.”

Allison Kirkby, president and CEO of the Tele2 group, said: “To create greater value for our customers and our shareholders over the longer term, we believe Tele2 Austria will benefit from consolidation with Three Austria.”

Alfred Pufitsch, CEO of Tele2 Austria, added: “The transaction will bring together two great players in the Austrian market. The combined strength will create a company that is even better at serving the Austrian customers.”

Tele2 launched a mobile virtual network in Austria two years ago, using T-Mobile Austria infrastructure, but it is not yet known how many customers it had nor how they will be transferred to the Three Austria network.

Tele2 has operations in Croatia, Finland, Germany, Kazakhstan, Latvia, Lithuania, the Netherlands and Sweden. There is a separate, unrelated Tele2 business in Russia.

Kirkby said: “This opportunity also enables an increased focus on successfully executing our strategy in our remaining footprint. I would like to take this opportunity to thank the Austrian team for their engagement and their many contributions to Tele2 over the past 18 years.”

The Stockholm-based company will receive €85 million when the deal is closed – “anticipated within the next months”, said the company – and €10 million “in the form of an earn-out to be paid over 12-24 months depending on the success of the integration process”.