RIGA - Competition on the mobile phone market has entered a new phase as players 's including Bite Latvia, the new GSM/UMTS operator 's engage in an advertising war during the run-up to December, when Latvians will be able to change operators while preserving their phone number.
For years, the industry's leaders - LMT and Tele2 's have posted record-breaking earnings. LMT, whose earnings amounted to 55 million lats (79 million euros) last year, has even been dubbed the most profitable corporation in Latvian history.
But the arrival of Bite Latvija, a subsidiary of Denmark's TDC 's promises to change all that.
"More and more customers will now benefit from the modern Bite services - fair prices, our personalized service," says Jesper Theill Eriksen, CEO of Bite Latvija.
The operator, which opened its first store in Riga last week, paid a whopping 6.2 million lats for its 15-year license and is moving quickly to recoup the investment. "Right now we're ahead of schedule," Eriksen told The Baltic Times, adding that Bite Latvia could already provide coverage for approximately 90 percent of the country's population.
Meanwhile, the competition is feeling the pressure, and has both reduced its prices and stepped up its own advertisement campaign.
"While LMT, Tele 2 and Triatel were on the Latvian market, the competition wasn't that strong, but as soon as Bite Latvija appeared, every company began to spend large amounts of money on advertising," LMT CEO Janis Lelis told the Diena daily.
"We're counting on prices decreasing by 15 percent in the next six months now that Bite is on the market," Lelis said. "The process has already started."
As things stand, LMT is way ahead of the competition. The company, owned by TeliaSonera, Lattelekom and the Latvian government, has 849,000 subscribers and plenty of cash to throw around in the upcoming battle.
Right now, LMT's O-card provides for phone calls for 0.01 lat per minute on weekends and on business days after 8 p.m., plus a special offer for subscribers: free times after the first four minutes paid at the regular price.
"Of course we understand that the possibility to change the operator and keep the old number will give customers much more freedom, that's why for other operator's clients LMT offers better coverage, different services and technologies, which won't be accessible for other operator networks," an LMT spokesperson said.
Tele2, the Swedish-owned operator, does not divulge its number of users, but it too has begun offering significant discounts on five different tariffs: new subscribers, internal network, business class, uniform and active tariffs. The average price is no more than 0.17 lat per minute.
"Our main guidelines are clients and their current demands, not new competitors," stated Peteris Kirdeika, Tele 2 managing director.
"As for Bite, it should be said that we have a positive experience in competing on the Lithuanian mobile phone market, because the number of clients and market share of Tele2 in Lithuania is growing every year. So we are sure about our strategy and operations in Latvia as well," he commented.
Bite Latvija, which launched its postpaid service "Bite Private" last week, will have a simple set of tariffs: 0.05 lat for calls within its network and 0.1 lat for calls to other networks.
"Our company supports fair prices and fast number portability implementation," says Jesper Theill Eriksen, CEO of Bite Latvija. "This will further promote effective competition on the market," he assured.
It is unclear how the price-war will affect Triatel, another mobile operator that began offering services in November last year. Triatel uses the CDMA standard and a different type of SIM card than the other three operators. Still, the company has big ambitions in a finite market.
"By the end of the year, Triatel will be available to 80 percent of Latvia's population 's namely, in all the largest cities and along the highways," Martins Klevers, a company representative told the Baltic News Service.
"It is planned that next year the network will cover the entire territory of Latvia," he added.
In 2004, Triatel generated 2.5 million lats in sales, which is 83 percent more than in 2003.
But the advertisement war has reached its peak. Prime-time television and the major daily papers are flooded with ads from all four operators. Some of the TV commercials are back-to-back. Operators agree that the goal is to win over new clients given the fact that the mobile penetration rate in Latvia is lower than in other East European countries.
For example, the number of mobile users in Estonia reached almost 95 percent in the first quarter of 2005, whereas in Lithuania the number was more then 107 percent.
In Latvia, by contrast, the number is about 80 percent.
But the companies appear willing to go to any length to win over new subscribers. Bite Latvija reportedly gave out free prepaid Toxic cards in Riga and Daugavpils schools. Riga city officials blasted this as unethical. Meanwhile, Tele 2 was criticized by the National Armed Forces for using the guard at the Freedom Monument for advertisement purposes.