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Etel deal faces antitrust scrutiny
John Mulligan



THE proposed Euro90m acquisition of Irish-owned telecoms operator Etel by Telekom Austria is to be investigated by the Austrian antitrust authority (BWB) amid fears that it may create a dominant player in the country's market.

A Vienna-based carrier, Silver Server, last week complained to the BWB alleging that the buyout would undermine the liberalisation of the Austrian telecoms market. BWB issued a notice at the beginning of this month seeking submissions from companies that believe their legal or economic interests may be affected by the takeover. The Austrian competition authority has said it will thoroughly investigate the proposed all-cash acquisition of Etel, which has operations in Austria, as well as Slovakia, the Czech Republic, Poland and Hungary.

Etel has about 250,000 fixed network and internet customers in Austria and also operates as an MVNO (mobile virtual network operator).

Founded by Seán Melly, the sale of Etel would net him roughly Euro10m. Another shareholder, former central bank director and Etel chairman Bernard Somers would be in line for a similar payout. He is also active on a number of Irish firms such as DCC, IN&M and AIB. Other shareholders in the firm, such as Dresdner Kleinwort Capital, Greenhill, Argus and Intel, own an estimated 70% of the company's equity.

Should the Austrian antitrust authority decline permission for the takeover, Etel may be left scouting for another buyer. BWB could also instruct Telekom Austria, which is 25% government-owned and the country's largest telecoms player, to dispose of certain assets before proceeding.

Etel has accumulated losses of approximately Euro170m and reported annual sales of Euro100m in 2005. Sales for 2006 are expected to have reached Euro115m. Last year it paid Euro30m to acquire Austria's largest internet provider, EUnet. Last week Telekom Austria's chief executive said he's interested in acquiring a stake in Greek operator Hellenic Telecommunications.




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