Telekom Austria Tackles Integration of Fixed and Mobile Units

Event Summary

February 23, 2010 – Telekom Austria plans to integrate its domestic fixed and wireless units, mobilkom austria AG and Telekom Austria TA AG, into a single company, to be called A1 Telekom Austria. The legal merger is expected to be complete later in 2010.

Analytical Summary

• Current Perspective: Positive on Telekom Austria's plan to merge its fixed and mobile units, because the move is in line with the company's strategy of retaining its domestic market share via an aggressive multiplay approach. Telekom Austria has delivered strong results with its bundled packages in terms of customer uptake, and combining its fixed and mobile divisions will support further innovation and bottom line end-user sales in this area.

• Vendor Importance: High to Telekom Austria, because the use of separate product silos to develop, sell and support fixed and mobile services is counter-productive, causing unnecessary complexity, duplication of effort and internal competition for customer contracts. The company needs to merge its wireline and wireless operations in order to counter these effects and streamline service deployment and sales activities.

• Market Impact: High on the fixed and mobile consumer telecommunications services markets in Austria, because the incumbent already controls significant segments of these markets, in large part due to its success with multi-service bundling. The merger of its mobilkom austria and Telekom Austria organisations will only enhance the company's capabilities in this regard, heightening the competitive threat to alternative players.

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Current Perspective

Competitive Strengths and Weaknesses

Recommended Actions - Vendor, Competitors, En Users

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