Hutchison to buy Orange Austria as it seeks expansion

Advertisement showing Hutchison's services
Image caption Hutchison has been looking to expand its presence in Hong Kong as well as overseas markets

Hong Kong's Hutchison 3G has agreed to buy Orange Austria in a bid to expand it presence and boost its market share in the country.

Hutchison will pay 1.3bn euros ($1.7bn; £1bn) for a complete buyout of the firm.

The deal is expected to make Hutchison, which already operates in Austria under the name '3', the third-largest mobile phone operator the country.

Hutchison 3G is unit of billionaire Li Ka-shing's Hutchison Whampoa.

The deal still requires to be approved by regulators.

'Critical mass numbers'

Hutchison's '3' brand has been lagging behind other competitors such as A1 and T-Mobile Austria which have the bulk of the market share.

Analysts said that for Hutchison to remain viable and profitable in the country, it had to increase its consumer base.

"In the telecom business there is a real correlation between market share and profitability," Bertrand Bidaud of Gartner told the BBC.

Mr Bidaud explained that given the high competition in the Austrian market, the best way for Hutchison to increase its share was to look for consolidation.

"To get market share you can fight against the competition or buy one of them out - that is what they have done" he said.

"It is a significant step to reach critical mass numbers for Hutchison."

The deals is expected to give Hutchison access to 2.8 million consumers and take its market share to almost 22%.

Further sale

However, Hutchison will sell some some assets of Orange Austria to Telekom Austria.

These may include base station sites, and certain intellectual property rights.

It is also expected to offload Orange Austria's affiliate mobile phone operator Yesss!.

Analysts said Hutchison was looking sell these in a bid to ensure that it there was no objection to the deal from the competition watchdog.

More on this story