Hutchison’s Austrian arm has completed its anticipated acquisition of local rival Orange Austria, combining the country’s two smallest networks.

3 Austria will acquire 100 percent of Orange Austria from its current owners France Telecom (35 percent) and private-equity firm Mid Europa Partners (65 percent) for an enterprise value of EUR1.3 billion.

However, as expected, 3 Austria will then sell on Orange Austria assets worth EUR390 million to Telekom Austria. These assets include Orange’s prepaid ‘Yesss’ mobile brand, plus spectrum and base station sites.

The net consideration payable by 3 Austria of EUR0.9 billion for Orange Austria (after the sale of the assets to Telekom Austria) equates to 6.9x earnings (EBITDA). 3 is targeting cost and capex synergies to the tune of EUR500 million from the combination.

The merger between third-placed operator Orange and fourth-placed 3 would create a stronger challenger to Austria’s two largest mobile operators, Telekom Austria’s A1 and T-Mobile.

“With pro-forma 2.8 million customers, a market share of 22 percent and combined revenues of more than EUR700 million in 2011E, this transaction creates a strong and competitive top three player in the Austrian market,” said 3 Austria in a statement.

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.