France Telecom S.A. (FTE) is in advanced talks to sell its 35 percent stake in Orange Austria to Hong Kong-based conglomerate Hutchison Whampoa Ltd. (HUWHF.PK, HUWHY.PK), according to media reports on Monday.
The deal may value the whole of Orange Austria at 1.4 billion euros, or $1.78 billion, and is part of France Telecom's strategy to reduce its footprint in Europe in order to cut down on costs. Orange Austria is owned by France Telecom and private equity firm Mid-Europa Partners.
According to media reports, the sale of the Austrian mobile company would probably include spectrum, some infrastructure, and the prepaid business, which operates under the brand 'Yesss!.
Orange Austria is the third-largest mobile business in Austria, with around 20 percent of the market. In 2010, the group recorded revenue of 578 million euros and net loss of 9 million euros.
France Telecom's Chief Executive Officer Stephane Richard has said that he plans to focus on bolstering the company's presence in emerging markets, especially in Africa and the Middle East, and exit slower growing European markets.
France Telecom, in late December, agreed to sell its Swiss mobile subsidiary, Orange Communication S.A, to private equity group Apax Partners for 1.6 billion euros.
In late October, France Telecom said that its revenues for the third quarter, excluding the impact of regulatory measures, declined 0.5 percent from last year, reflecting lower mobile device sales.
Hutchison Whampoa, the ports-to-property conglomerate owned by Hong Kong tycoon Li Ka-shing, is already present in Austria under the brand name '3' and is that country's fourth-largest mobile operator.
Austria has a mobile penetration of about 150 percent, and with 12.7 million connections, is struggling to support four telecom companies.
The combined Hutchison entity of 3G Austria and Orange Austria would have around 3.5 million customers and a market share of 28 percent. A1 Telekom Austria currently has a market share of 41.3 percent in Austria, followed by T-Mobile with a share of 30.8 percent.
On the New York stock exchange, FTE closed Friday's regular trading at $14.86, down $0.37 or 2.43 percent on a volume of 3.46 million shares. HUWHY.PK closed trading at $17.47, down $0.08 or 0.46 percent on a volume of 23,402 shares.
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