Telecom offers free airtime

More than half-a-million Telecom mobile phone users will get free air time in the latest move in an increasingly competitive mobile market.

Starting today 560,000 Telecom prepaid 027 customers can call any Telecom mobile phone or landline in New Zealand and talk for up to an hour, paying for only the first three minutes as per their calling plan.

Customers on a 49 cents a minute plan will pay $1.47 for a one-hour call to another Telecom mobile or landline.

The promotion will run until the end of the year for calls made between 7pm and 7am on week-nights and all weekend from 7pm on Friday.

After an hour call costs revert to the customer's calling plan.

Kevin Bowler, Telecom head of marketing for mobile, said the promotion was timed for the pre-Christmas seasonal market.

"It's an insanely competitive market ... it's great fun," he said.

Vodafone, who launched their 3G service earlier this month, did not comment on their rival's latest move.

Although users have recently been bombarded with new services, including video calling and music players, Bowler said this promotion focused on the primary reason for owning a phone.

"They talk about killer applications and really there is only one killer application in our business, and that's voice."

Bowler said the cost of prepaid calling meant many calls were less than three minutes long.

Because of this he said Telecom was not expecting to see a "big hole in revenues", rather that customers would make longer calls.

"If we can provide pricing that provides certainty ... then we believe people will talk more."

Ernie Newman, chief executive of the Telecommunications Users Association of New Zealand said: "It shows just the kind of margins that are actually in that sort of call. They would not be doing this sort of thing and making a loss".