Czech Telefónica's O2 sparks price war, drops phone subsidies

Telefónica Czech Republic has thrown down the gauntlet to rival operators with a range of cheaper tariffs and a stop on phone subsidies, as the operator rattles cages over new conditions proposed this week for the country's LTE spectrum auctions.

In a press release, Telefónica Czech Republic chief executive Luis Malvido said the mobile operator would simplify its offering under the O2 brand, introducing three basic voice and data packages priced from about €9.6 to €29. The move has already prompted rival operator Vodafone CR to say it will make similar moves in the coming weeks, and Reuters reported that T-Mobile CR also said it would announce a similar offer in the coming days.

Unlike Telefónica, however, Vodafone stressed it would continue to offer subsidised smartphones: Telefónica CR said it will launch a new O2 Movil service to allow users to spread the cost of buying a phone over 24 months: "Device subsidies offered in return for a minimum monthly spend will no longer be available," the company said.

The new prices launched by Telefónica CR are close to those offered in the highly competitive market of Austria, and the move is seen as a response to the possible arrival of a new player under the terms of the revamped spectrum auction conditions, Reuters cited Ceska Sporitelna analyst Petr Bartek as saying.

The Czech Telecommunications Office (CTO) this week unveiled new conditions for a spectrum auction that include setting aside some frequencies in the prized 800 MHz band for a new entrant. The regulator changed the conditions after it took a highly unusual decision in March to cancel the first auction process over concerns that bids had risen too far above the reserve price.

Telefónica Czech Republic has made no secret of the fact that it is far from happy with the proposals.

"We are really disappointed with the changes," Reuters quoted Malvido as saying. "We...will give our input to the regulator but this is far away from what we expected...and this is damaging our business case."

Malvido said the operator would provide its feedback and then consider what further steps to take.

Reuters said the fourth bidder alongside existing operators Telefónica CR, Vodafone CR and T-Mobile CR is expected to be PPF Mobile Services, a unit of the PPF investment group owned by Petr Kellner, the Czech Republic's richest man.

For more:
- see this Telefónica CR press release
- see this Reuters article
- see this Bloomberg article
- see this other Reuters article

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