Czech Telefonica expects record gain in customers

PRAGUE, April 29 Mon Apr 29, 2013 4:30am EDT

PRAGUE, April 29 (Reuters) - Telefonica Czech Republic expects a record rise in new contract customers in the second quarter after cutting mobile rates and launching unlimited calling packages as part of a price war shaking up the Czech market.

Telefonica was the first to introduce new voice and data packages priced from 249 crowns to 749 crowns ($12.61-$37.92) a month just over two weeks ago, causing T-Mobile and Vodafone to quickly match the offer.

"We expect a record gain of post-paid customers," Telefonica spokesman Hany Farghali said. "More than 100,000 people have requested activation of our new unlimited tariffs. The majority of these have ordered the highest tariff."

He did not specify how many of those customers were existing clients switching to the new tariffs and how many were new customers.

The top package includes unlimited call time and text messages and 1GB of data.

Telefonica CR had 5.1 million Czech mobile customers at the end of 2012, with 3.2 million under contract. T-Mobile had 5.5 million customers.

With customers often complaining the Czech market lacks competition and that prices are high, the battle among operators is the biggest shake-up in years and mirrors a turf war being fought in neighbouring Germany.

Analysts also say the new packages -- and two-year contracts that come with them -- allow the incumbent operators to protect themselves against new virtual operators and the likely arrival of a fourth operator this year if a new auction for frequencies goes through as planned.

The price cuts, which analysts expect to put significant pressure on margins, would make it more difficult for the new entrant to launch services and win customers easily, they said. ($1 = 19.7520 Czech crowns) (Reporting by Jan Korselt; writing by Jason Hovet; editing by Keiron Henderson)

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