T-Mobile sees 10 pct drop in mobile rates

(Adds detail from interview)

By Nicola Leske and Joern Poltz

BERLIN, Aug 29 (Reuters) - T-Mobile's chief executive expects prices in Germany's mobile communications market to decline by around 10 percent annually and hopes to compensate for the drop with new products to increase customer usage.

Hamid Akhavan told Reuters in an interview ahead of the IFA consumer electronics trade fair that there had been a fall in prices over the past 12 months in Germany, where customers are less willing to pay for data than in other European countries.

"Prices may drop up to 10 percent in the German mobile market," he said

Despite that development, Akhavan said he was confident Deutsche Telekom's (DTEGn.DE) mobile division was well prepared with the rates it offers to compete with rivals.

T-Mobile hopes to attract new customers by offering personalised interfaces on mobile phones, tapping into the craze for social networks.

The service, dubbed MyFaves for my favourite phone numbers, allows users to choose five numbers they call most frequently in connection with a special calling plan and an interface for easy use, said Akhavan, who has images of Chief Executive Rene Obermann and fellow board member Timotheus Hoettges on his MyFaves interface.

"We have very high hopes for MyFaves, which won 2.5 million customers within a year in the United States," Akhavan said, adding that it would be "fantastic" if a fraction of that could be reached in Europe. T-Mobile is the market leader among mobile phone providers in Germany and has replaced fixed-line unit T-Com as Deutsche Telekom's growth driver.

POTENTIAL APLENTY

Akhavan sees plenty of potential in the German market, where 80 percent of telecommunications is still done by landline, as customers substitute traditional phones for mobile ones and as new gadgets such as Apple Inc.'s (AAPL.O) iPhone increase interest in data transmission.

"It piques the interest of consumers in mobile data," he said, adding that T-Mobile could only benefit from customer curiosity about the possibilities new technology can offer whether the company sells the iPhone or not.

He declined to comment on media reports that T-Mobile had clinched a deal to sell the popular media-playing iPhone but said that, like all operators, T-Mobile had discussions with the U.S. technology group.

Akhavan said the company was also trying to reduce churn, the rate at which customers leave and are replaced by new clients, which is not reflected in net changes to overall customer numbers but is expensive for operators.

"If churn comes down 1 percent, that would have a huge impact on profitability," he said.