The operator launched 3G services last summer and has a target of achieving 1 million customers by the end of 2006. This second stage consists on increased marketing and communication efforts as well as increased investment on 3G. Comment:

A number of European operators have recently announced plans to increase 3G service take up. It looks as if the pressure is finally on to show some positive results and demonstrate that 3G services are something that customers - really want. Whilst we welcome Portugal Telecom's decision to dedicate up to €40m (70%of its CAPEX) on 3G, we just hope this second stage does not necessarily mean price reductions.

Some of TMN's counterparts in Europe in recent weeks have already tinkered with price cuts - in our view a dangerous strategy. TIM in Italy announced only at the beginning of this week that it was to start offering free calls and content to its 3G customers as a way to increase take up. And SFR in France has just started reducing the cost of its 3G subscription by half, including higher handset subsidies.

Whilst price reductions may be a way to attract new customers, it does not necessarily have a positive impact on the revenue line, and mobile operators need to be well aware of the implications of such strategy.

TMN in Portugal has been experiencing fierce competition from Vodafone, and this may be a reactive decision rather than a proactive one. The good news for TMN, however, is that, according to their latest statement, 3G customers present an ARPU 20% higher than the normal ARPU. If TMN avoids embracing price cuts, it may become a 3G success story.

CoTeCal Launch Commercial 450MHz CDMA2000 1x & 1x EV - DO Network