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New price war in store as mobile phone competition hots up

Competition in Switzerland's mobile telecommunications sector is hotting up with two new service providers due to enter the fray. Neither Sunrise nor Tele 2 have struck deals with Swisscom and Orange to offer their customers pre-paid mobile services

Competition in Switzerland's mobile telecommunications sector is hotting up with two new service providers due to enter the fray. Neither Sunrise nor Tele 2 have their own mobile networks but they've struck deals with Swisscom and Orange to offer their customers pre-paid mobile services.

From next month, Tele 2 mobile customers will be able to access Swisscom's network, while a similar agreement between Sunrise and Orange will start in June.

Analysts expect the development to lead to a price war and Tele 2 has already announced tariffs that undercut its competitors.

"We will certainly see lower prices," says Sven Bucher, telecommunications analyst at the Zurcher Kantonalbank. "We've seen this in other countries where there are more operators."

But there are also advantages for the companies that have established networks.

"They'll have more traffic on their networks," says Bucher, "Network costs are more or less fixed so each additional customer you have will boost revenues. It's quite expensive to attract new users so the more companies there are advertising the less expensive it is."

The mobile phone market is set for a further shake-up later this year when bidding begins for the third generation of mobile phone licences. The current jockeying for position is a prelude to that battle.

"Sunrise is one of the toughest competitors," says Bucher, "because they have strong shareholder backing. But I can imagine other companies such as Deutsche Telekom or Telefonica bidding too."

by Michael Hollingdale

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