* Rates cut to 0.0179 eur/minute in two tranches
* Current levels are at 0.0336-0.0339 eur/minute
* Cut costs sector annual 500 mln euros - D.Telekom
FRANKFURT, Nov 16 Germany's network regulator said on Friday it will lower the rates the four mobile operators can charge each other to connect calls, putting further pressure on their already shrinking revenues.
The Bundesnetzagentur said that effective Dec. 1 Deutsche Telekom, Vodafone, Telefonica Deutschland and KPN's E-Plus can charge 0.0185 euros a minute, down from current levels of between 0.0336 euros and 0.0339 euros per minute.
In a second round effective Dec. 1 next year rates will be cut to 0.0179 euros per minute, the regulator said in a statement.
The cuts come as European telecoms firms face falling prices and a drop in use of highly profitable text messaging as people use internet applications instead, resulting in a wave of dividend cuts across the sector.
Stiff regulation has been criticised by telecoms executives who say it is sapping the industry of much needed capital just when it faces huge investments in new, faster, fixed and mobile networks.
A Deutsche Telekom spokesman said the decision would cost the German telecom operators about 500 million euros ($635.28 million) annually, adding that the cuts didn't bode well for future investments in fast internet.
"With this decision the Bundesnetzagentur follows the complete erroneous European policy of the past 10 years, which has cost the European telecom sector its global leading role," a Deutsche Telekom spokesman said.
Vodafone said the decision was a "dramatic cut", which will drag money away from much needed investment in faster networks.