Austrian mobile operators consolidate, but a new player is on the horizon

Some rather thorny consolidation just occurred in the Austrian mobile market, with 3 Austria closing its acquisition of Orange Austria, minus some of Orange’s key assets, which were sold off to Telekom Austria.

The explanation of how this changes the country’s telecoms landscape is rather number-tastic, so bear with me. Orange was the third-largest operator and 3 the fourth, so 3 is now number three (T-Mobile(s dtea) is in second place). Meanwhile, Telekom Austria(s ta1)’s A1 operation finds its number one spot entrenched, as it has picked up certain frequencies from Orange, along with base stations and Orange’s cheapo brand, the awesomely-named yesss! (exclamation theirs, not mine).

Hutchison Whampoa(s huwa)-owned 3 paid out €1.3 billion ($1.7 billion) to Orange’s former owners, France Telecom(s ftea) and Mid Europa Partners. The Telekom Austria deal was worth €390 million ($511 million).

All this action has been brewing for almost a year, with the delay due to competition authorities’ concerns. The particular sticking point was the yesss! acquisition, as that mobile virtual network operator (MVNO) was the only real competitor to A1’s own low-cost brand, ‘bob’. However, the Austrian cartel court cleared the deal in December, and the country’s competition authorities decided not to appeal.

“We are delighted that, after undergoing a lengthy regulatory process, we have finally been able to close this acquisition,” 3 CEO Jan Trionow said in a statement. “We can now get down to focusing all our efforts on playing a leading role in developing the future of the Austrian mobile market.”

What will that future look like? Well, it may not be that consolidated after all.

The European Commission gave its approval to the 3/Orange takeover in October, on the condition that the combined operation give wholesale access to up to 16 MVNOs, so as to preserve competition in the Austrian market. It also got 3 to agree to give up spectrum to a new entrant – a full mobile network operator (MNO) – which will get to combine that with even more spectrum that will be auctioned off later this year.

In other words: there were four, now there are three, and soon there will be four again. However, things aren’t that simple – they never are in this game.

Earlier this week, T-Mobile Austria lodged an appeal over the spectrum aspect of the takeovers. T-Mobile’s problem is essentially that 3 and Telekom Austria now have enough coherent spectrum in the 1800MHz band to deploy long-range LTE services ahead of, well, T-Mobile.

T-Mo does already do 4G, as it picked up spectrum in 2.6GHz band when that got auctioned off previously, but that’s relatively short-range when compared with 1800MHz (which T-Mobile has, but not in a great enough quantity – essentially, T-Mobile’s spectrum assets are too spread out).

When you’re in a mountainous country, range is everything if you want to roll out mobile broadband without breaking the bank, and the lower the frequency the better. More sub-1GHz spectrum will be auctioned off later this year, which will give everyone a chance to do 4G over very long distances, but it’s the time between now and then that T-Mobile is complaining about.

“We would be a year behind or more on LTE deployment and that’s why we’re appealing the transfer,” T-Mobile’s spokesman told me.