Deutsche Telekom buys Tele.ring for €1.3bn

10 Aug 2005

Following the pattern of a gradual selling off of Western Wireless International subsidiaries, such as Eircom’s acquisition of Meteor last month for €420m, it emerged this morning that Deutsche Telekom signed an agreement with Alltel Corp’s Austrian Unit, Western Wireless Austria, to acquire full control of mobile operator Tele.ring for €1.3bn.

Deutsche Telekom’s subsidiary T-Mobile Austria, which signed the deal, will also take on Tele.ring’s estimated €150m net operating loss. It is expected the deal will result in synergies valued at €300m.

The acquisition will be subject to approval by the Austrian telecommunications regulator as well as approval by the EC.

It is understood that T-Mobile Austria wants to arrest a market share slide to leader Telekom Austria AG. T-Mobile came under pressure in Austria after Tele.ring, a unit of Western Wireless Corp., undercut prices, making its services attractive for younger people in particular.

The market share at T-Mobile’s unprofitable Austrian unit dropped to 25pc in June from 29pc at the beginning of 2004, while Tele.ring’s market share rose to 11pc from 8pc in the same period. A combination will bring T-Mobile closer to Telekom Austria’s market share of 41pc.

By John Kennedy