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Deutsche Telekom is expected to announce on Friday that it has agreed to buy Telering, the Austrian mobile phone operator, for about ?1.3bn ($1.6bn).

The deal will boost the number two position of T-Mobile, Deutsche Telekom's mobile business, in Austria from 2m to about 3m subscribers, behind the 3.3m customers of Telekom Austria.

Deutsche Telekom on Thursday confirmed that its supervisory board had approved the deal, but was awaiting final signatures on the agreement before announcing completion.

Telering was put up for sale by Western Wireless of the US, along with a number of its other overseas operations, after the US operator agreed to a takeover by rival Alltel. Deutsche Telekom is advised by Merrill Lynch, while Deutsche Bank advises Western Wireless.

The transaction is psychologically important to the management at Deutsche Telekom, which has just started returning to health following mountainous debts and record losses following its spending spree during the technology bubble.

The deal is its biggest outright acquisition following the rapid-fire spending spree under former chief executive Ron Sommer, who was ousted three years ago.

Mr Sommer's acquisitions included the $34bn purchase of US mobile operator VoiceStream, that of Powertel, another US mobile operator, for $6bn, as well as the ?5.5bn purchase of IT business Debis from DaimlerChrysler.

By contrast, Kai-Uwe Ricke, the current chief executive, has pledged to refrain from mega-deals, and to concentrate instead on add-on deals in regions such as eastern Europe.

Mr Ricke's biggest deal so far has been the re-integration of internet unit T-Online, a move that cost Deutsche Telekom about ?3bn. Mr Ricke will watch investor reaction to the latest deal with interest amid expectations that the big European incumbents are set to embark on another acquisition spree over the next two years.

The Telering acquisition is the latest in a flurry of recent strategic deals in the European telecommunications sector.

Last week, France Telecom sealed a ?10bn deal for Amena, Spain's third largest mobile operator, and Ireland's Eircom secured its return to the mobile business by buying Meteor, a local mobile operator also owned by Western Wireless, for ?420m.

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