While no deal has been formally signed yet, Deutsche Telekom has confirmed that its mobile unit T-Mobile International AG is working on details of the transaction. It is thought that Deutsche Telekom will pay something in the region of 1.3bn euros ($1.58bn) for the fourth-biggest mobile phone operation in Austria, which has more than 926,000 subscribers.
Last year Vienna-based Tele.ring made revenue of 121m euros ($147m). However, it competes in a very crowded marketplace, in a country with only 8 million inhabitants. Competitors include market leader Telekom Austria AG’s Mobilkom, and second-placed T-Mobile Austria. Third place is occupied by German utility E.ON’s One GmbH unit, while newcomer Hutchison Whampoa with 3 Austria is last.
The addition of these 926,000 customers to the 1 million subscribers at T-Mobile Austria, will allow it to take on market leader Mobilkom, which has approximately 3.3 million subscribers. T-Mobile Austria has 2.06 million customers, and the customer boost will put it on par with the market leader. It will also help stop a market share slide at T-Mobile Austria, which has been losing customers to Mobilkom, while battling the cut-price offerings from Tele.ring, which has made its offerings very attractive for the youth market.
Earlier this week, staff at Tele.ring had threatened a one-day strike to protest any plans to sell it, citing fears that there would be job cuts to the workforce of 600 people. However, the strike did not take place.
Meanwhile, it is by no means certain that Deutsche Telekom is the only one interested in acquiring Tele.ring. Reports are circulating that the Middle Eastern and African conglomerate Orascom, whose subsidiaries include Orascom Telecom, is also in talks with the Austrian operator.
