Acquisition will enable 3 to ramp up rivalry with Telekom Austria.

3 Austria on Friday agreed to buy Tele2 Austria for €95 million, a deal it says will enable it to compete more directly with incumbent Telekom Austria.

The combination of Tele2’s fixed-line and TV assets with 3’s mobile business will create a company with 4 million customers and revenue of €1 billion.

"Today is an historic day for Tele2 and 3 in Austria. With the takeover of Tele2 Austria, we are closing our last offer gaps and are thus moving closer to the number one," said Jan Trionow, CEO of 3 Austria, in a statement.

"For the large private companies, we will be the only real alternative to the former monopolist," he said.

In 2016, Tele2 Austria generated revenue of €115.27 million and EBITDA of €19.38 million. It ended the year with 217,000 customers.

Under the transaction, 3 Austria will acquire 100% of Tele2 for €95 million, with €10 million of that sum payable in up to two years depending on how well the integration goes.

"The transaction will bring together two great players in the Austrian market. The combined strength will create a company that is even better at serving the Austrian customers," said Tele2 Austria CEO Alfred Pufitsch, in a statement.

As well as offering fixed-line and TV services, Tele2 recently returned to Austria’s MVNO market with a service hosted on T-Mobile’s network. Tele2 first pulled out of the market in 2007, selling its operations and 130,000 customers to Telekom Austria for €7 million.

"To create greater value for our customers and our shareholders over the longer term, we believe Tele2 Austria will benefit from consolidation with 3 Austria," said Tele2 group CEO Allison Kirkby. "This opportunity also enables an increased focus on successfully executing our strategy in our remaining footprint."

The deal is subject to approval by Austria’s competition watchdog, and is expected to close before the end of the year.

Allison Kirkby is one of the keynote speakers at Total Telecom Connected Europe, taking place in Lisbon on 11-12 October. Click here to find out more.