O2 Ireland claimed yesterday it had agreed a two-year deal with the Commission for Communications Regulation (ComReg) to cut the cost of mobile calls.
The company will reduce the fees it levies on other telecoms operators to connect calls to its mobile network.
The mobile firm said this would reduce the cost of making calls to mobiles from fixed lines and other mobile networks by at least 8 per cent over the duration of the deal. It should also force Vodafone and Meteor to introduce similar tariff reductions to remain competitive.
However, a spokesman for ComReg would not confirm whether the deal had been signed yesterday, and said the regulator would issue a statement shortly.
ComReg recently threatened firms with regulatory action to reduce mobile rates, which it said may be too high. From this Friday, ComReg will assume tough powers over rates when new EU laws come into force.
O2 Ireland said its deal was based on a price cap whereby it agreed to reduce its termination rates - the fees it levies on other operators for terminating a call on its network - by a formula set at the consumer price index minus 8 per cent.
The first rate reduction using the new formula would come into force in September, when O2 reduces its mobile termination rates by 4.5 per cent, the firm said. This would bring its rates to an average of 11.5 cents, or the third cheapest in Europe, it said.
However, a lobby group representing fixed-line telecoms firms, called ALTO, said O2's proposed rate cuts did not go far enough.
"It falls far short of what we would have expected," said an ALTO spokeswoman. "In the UK, for example, Oftel successfully used new powers under the EU telecoms directive to instruct the industry to reduce the cost of calls made to mobile handsets by 15 per cent each year for the next three years," she added.
ALTO and several telecoms analysts have accused the two biggest Irish mobile firms of making excessive profits due to a lack of competition in the market. New figures issued by O2's parent MmO2 yesterday show that it generates more revenue from its Irish customers than any others within the group's operations.
O2 Ireland subscribers generate an average of €545 per year, up from the €537 reported in last quarter. In Britain the equivalent figure was €362, while O2's German subscribers generate just €348 on average each year.
Meanwhile, O2 Ireland said it had added 17,000 new subscribers in the Republic, bringing its customer base to 1.272 million. It also said it was close to concluding a new agreement with Vodafone that would enable subscribers to send new multimedia messages between the networks.
Although O2's parent MmO2 said it had added more than a quarter of million new customers during the quarter, the firm slipped 1p to 53p in London.
Analysts blamed the fall on concerns about greater competition in the British market and falling mobile termination rates.
MmO2 now has 18.7 million subscribers, a drop from the 19.4 million total in March, reflecting the sale of its Dutch unit in April.
