Austria's new mobile telecom players to halt price rises - RTR

By Shadia Nasralla and Angelika Gruber

VIENNA (Reuters) - New mobile telecom providers set to enter the Austrian market within months can become real competitors to the established market players by luring hundreds of thousands of customers and halting price rises, the head of regulatory body RTR said.

Hutchison Whampoa unit Drei Austria has to offer wholesale access to its network to as many as 16 mobile virtual network operators (MVNO) which use another company's network to offer telecoms services.

This was a regulatory condition in Hutchison Whampoa's acquisition of Orange Austria in 2013, which was followed by price rises in Austria's telecoms market on average of about 20 percent, according to RTR. Users of phone and SMS services only had to face price rises of around a third since then.

Even though Drei must eventually start opening to MVNOs, almost two years have passed with no increased competition. The European Union's powerful antitrust chief, Joaquin Almunia, has acknowledged the way the EU handled the merger was a mistake.

RTR head Johannes Gungl said new entrants may gain hundreds of thousands of customers in Austria, whose 8.5 million people own around 13.2 million SIM cards.

"It is absolutely realistic to think that these new providers could attract hundreds of thousands of customers within three years," Gungl told Reuters, adding it was likely the new entries will stop further price rises.

"I believe that new providers will and want to differentiate themselves in terms of price because they can't do it through their network, because they are virtual providers... This will certainly soften prices."

PROVIDER SWITCH

Drei's obligation is an incentive for competitors as well to open up for MVNO suitors to stay competitive. Renting out infrastructure to newcomers can increase competition but can also bring in additional income for existing providers.

Three new entrants are poised to start up soon.

Gungl expected the three to enter the market in the next six months. Food discounter Hofer, the Austrian arm of German supermarket giant Aldi Sued, is set to piggyback on the network of T-Mobile Austria, part of Deutsche Telekom (DTEGn.DE).

"A Hofer in Austria with its retail structure is certainly not to be underestimated," Gungl said. Hofer offers products by no-frills provider yesss!, which had 600,000 customers when Telekom Austria (TELA.VI) took it over in January 2013.

Internet provider UPC, owned by Liberty Global (LBTYA.O), has said that it plans to offer mobile phone services using Drei's infrastructure. The third entry will most likely be Mass Response, a televoting firm.

Analysts at investment bank Espirito Santo expect UPC alone could attract 430,000 customers within four years as an MVNO.

RTR is working with the Federal Competition Authority to gauge patterns of price increases. It is also scrutinising fees that make it more difficult for customers to switch provider.

"These switch barriers are a worry for us," Gungl said.

RTR is embroiled in a court case about whether to annul a 2013 auction for mobile frequencies which brought the state 2 billion euros (1.99 billion pounds), but which some telecom companies say was flawed.

The court has said it might rule by November. Gungl did not expect the auction will have to be repeated.

(Editing by Michael Shields)