KPN's budget brand Blau targets crisis-hit Spain

By Sarah Morris

MADRID, Oct 7 (Reuters) - Dutch telecoms operator Royal KPN NV (KPN.AS) is hoping to find a niche in the Spanish market with its cheap German mobile brand Blau as consumers tighten their belts amid a sharp economic slowdown.

"The (economic) crisis creates opportunities," Blau's marketing manager in Spain, Miguel Angel Suarez, said on Tuesday at a news conference for the Spanish launch of the brand, which started in Germany three years ago.

"We are arriving at the right moment with a product to save (money)."

Blau will operate on France Telecom's (FTE.PA) Orange network, selling SIM cards via the Internet from midnight on Tuesday and in telecom shops operated by department store chain El Corte Ingles from Thursday.

KPN already operates in Spain as a virtual mobile operator with its Simyo brand, which it launched in January, also on the Orange network. Blau, which will offer pre-pay cards only, would focus on selling more in-store than Simyo, said Suarez.

Blau will charge 8 cents a minute for calls to fixed and other mobile operators in Spain, as well as to land lines in Argentina, Brazil, Venezuela and the Dominican Republic.

It will charge 1 cent a minute for calls to other Blau mobiles.

Blau will also offer Spain's high number of Latin American immigrants a tariff of 12 to 28 cents a minute to call mobile phones in their home countries.

In the summer, the world's largest mobile operator Vodafone (VOD.L) said its global revenue had been hit by the slowdown in Spain, with hundreds of thousands of immigrants losing their jobs at the end of a decade-long construction boom.

Blau's co-founder and general manager in Germany, Thorsten Rehling, said aggressive pricing and transparency had allowed the brand to grow from a small start-up in Germany .

"At the beginning everyone was laughing and saying we had no opportunity against the big players," he said.

"Recently, the Financial Times Germany was speculating that Blau already has 1 million customers."

On the sidelines of the news conference, Rehling declined to confirm whether the mobile operator had 1 million customers but said it was holding up so far.

"We have not seen any difference so far (in sales)," he said. "Of course like everyone else we are monitoring it very carefully. It might be that if people are looking for savings, offers like ours will do better."

Spain's mobile market is dominated by three main players -- Telefonica (TEF.MC), Vodafone and Orange -- but virtual mobile operators are increasing their share. (Editing by David Holmes)