Telekom Austria has agreed to merge its Liechtenstein mobile unit with the country's telecoms incumbent to create a converged player.

The Austrian incumbent revealed earlier this week that it has signed a formal partnership agreement that will bring together its Mobilkom Liechtenstein business with Telecom Liechtenstein.

The Mobilkom brand will disappear from the market; the merged entity will be known as Telecom Liechtenstein.

Under the terms of the non-cash transaction agreed by the two companies, the state will retain a 75.1% stake in Telecom Liechtenstein, while Telekom Austria will hold the remaining 75.1%.

Mathias Maierhofer, managing director of Mobilkom Liechtenstein, will serve as CEO of the combined company.

"The merger of these two companies marks a further step forward in the implementation of our convergence strategy," said Telekom Austria CEO Hannes Ametsreiter, in a statement.

Meanwhile, Telecom Liechtenstein chairman Markus Willi described the tie-up as "the next logical step" for his company.

"Together, we will be in a better position to meet the needs of both our residential and business customers," Willi said.

The merged company will have 49,000 subscribers and annual revenues of around 50 million Swiss francs (€41 million).

The deal is subject to regulatory approvals. The companies did not state when they expect it to close.