Tariffs slashed in new mobile phone battle

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Business Editor

Cellnet yesterday stepped up a price war in the mobile phones business by introducing new tariffs that it claimed would reduce charges to customers by as much as 30 per cent.

The move is part of a battle for market share among the fast-growing operators of digital mobile phones, prompted by the rapid growth of Orange over the last two years.

Cellnet, one of the first two companies in the field, operates both the older analogue phones and the more secure and better quality digital phones which are sweeping the market for new users.

Following aggressive new tariffs introduced recently by Orange, Cellnet said it was cutting its digital tariffs, increasing the length of off- peak periods and replacing charges by the minute with one second charging. Payment by the second allows customers to keep costs down by making brief calls.

Cellnet and its rival Vodaphone dominate the mobile phone market but have far more analogue than digital customers.

Orange, which sells only digital phones, claims only 7 per cent of the total market but said last month that it was winning 30 per cent of the 100,000 new digital customers who come into the market every month.

Orange also said that there were now twice as many new customers for digital phones in the UK as a whole every month as for analogue equipment.

The claims were made when the company, owned by Hutchison Whampoa, the Hong Kong conglomerate, and British Aerospace, announced a pounds 2.8bn stock market flotation.

The decision to raise money on the stock market is thought to be one of the factors behind the aggressive marketing campaigns that are now bringing a drop in costs for all users.

Howard Ford, the managing director of Cellnet, said: "Today's announcement is good news for Cellnet's customers and those considering a mobile phone, and bad news for our competitors who assumed they could compete on price alone."

One-second billing is to be applied to digital phone calls, where all peak-time calls are to be reduced by 5p a minute. Offpeak calls for medium level users are similarly reduced.

The Call Saver monthly subscription is to be reduced by pounds 5 for high users, who will also benefit from an extra 24 hours a week of off-peak periods.

The changes, , from 1 March, also allow low-usage analogue users to switch to digital, at no extra charge.