Japan's KDDI cuts call rates amid price war

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TOKYO, Oct 4 (Reuters) KDDI Corp <9433.T>, Japan's No. 2 mobile phone operator, unveiled a new pricing plan on Thursday that cuts basic fees and calling rates while raising handset prices in a move that could fuel a price war.

From next month, customers will be able to select a plan with a monthly basic charge of 1,050 yen () and 15.75 yen for 30 seconds of talk time, down from the firm's current lowest fee of 1,800 yen a month and 20 yen per half minute.

Under the new plan, however, a customer will not get a discount on a new mobile phone. Previously, KDDI would subsidise handsets to the tune of 20,000 yen.

Rival NTT DoCoMo Inc <9437.T>, which holds half of Japan's market of 100 million mobile phone users, is expected to follow suit with a similar plan.

Japan's telecommunications regulators have recommended that mobile operators cut payments of handset incentives, because it punishes users who stick to one phone with higher call charges to help pay for handset purchases by others.

Shares of DoCoMo have shed 14 percent since the June recommendation, while shares of KDDI have lost 10.5 percent.

Shares in No. 3 operator Softbank Corp <9984.T> have lost 16.8 percent.

Outside Japan, consumers often pay handset costs up front in exchange for cheaper call and data rates.

Softbank, which bought Japan's No. 3 operator from Vodafone last year, has already come up with its own method to remove the subsidies from its expenses by making users pay for handsets in instalments.

It has since slashed service fees, luring more new subscribers than its bigger rivals for the fourth straight month in August.

REUTERS SR DS1302

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