EU Opens In-depth Probe Into T-Mobile Buy Of Tele.Ring

BRUSSELS -(Dow Jones)- The European Commission Monday launched an in-depth investigation into T-Mobile Austria's plan to buy rival Tele.Ring Service GmbH.

The deal "may create significant competition problems by removing Tele.Ring as a competitor for (consumers)," the commission found in its initial investigation.

"This takeover is in a strategically important sector in the European economy," E.U. antitrust chief Neelie Kroes said in a statement.

"Market liberalization in the telecommunications sector produced good results, giving consumers innovative services and lower prices. It is crucial that those benefits are preserved," she added.

Last month the Commission extended its review of the deal by two weeks to study divestment offers made by the companies. However the offers didn't allay the Commission's antitrust concerns and now it will spend up to four months studying the deal.

Deutsche Telekom AG owns T-Mobile Austria. The planned purchase, valued at EUR1.3 billion, would make T-Mobile the second-largest operator in Austria, possibly allowing it to overtake the market leader, Mobilkom Austria, which is owned by Telekom Austria AG.

Tele.Ring is the fourth-largest mobile operator in Austria, with a market share of 13%. It was previously owned by Western Wireless International Austria Corp., a unit of U.S.-based Alltel Corp.

T-Mobile Austria is the country's second-largest operator, with more than three million customers. Its purchase of Tele.Ring would increase its market share to 36%. Together, T-Mobile and Tele.Ring would have a combined annual revenue of EUR1.4 billion.

"Tele.Ring is currently one of the most active companies in the market for end consumers in terms of price competition," the Commission said in a statement. "The removal of this active compeitor...raises concerns tht the planned transaction could harm the Austria consumer through possible price increases."

-By Adam Cohen, Dow Jones Newswires; +322 741 1486; adam.cohen@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 14th November 2005