Hong Kong's Hutchison Whampoa has reportedly begun talks to acquire Orange Austria with a view to merging it with its own Austrian mobile unit, 3 Austria. According to sources at Bloomberg, the transaction is valued at about EUR1 billion and could be finalised by year-end. 

The merger between third-placed operator Orange (2.2 million connections in Q3) and fourth-placed 3 (1.3 million) would create a stronger challenger to Austria’s two largest mobile operators, Telekom Austria (5.2 million) and T-Mobile (3.9 million).

“We see consolidation as positive [for Hutchison],” Adrian Lowe, a Hong Kong-based analyst at Mirae Asset Securities, told Bloomberg. “Given that they are already in Austria, this can help reduce competition.”

Orange Austria is 65 percent-owned by private-equity firm Mid Europa Partners, with the rest held by France Telecom. Austria is one of several European markets where France Telecom is reviewing the possible disposal of assets seen as ‘non-core.’

According to the latest Wireless Intelligence data, Austria had 12.7 million connections in total in Q3 2011, giving the country a mobile penetration rate of almost 150 percent.