A price war is unlikely as none of the other operators are responding in kind City Telecom has launched a new price war on the residential fixed-line market, slashing its tariffs to half that of rival operators to lure customers from New World Telecom, Wharf T&T and PCCW. Analysts did not expect the latest cut - CTI's most aggressive to date - to lead to a widespread price war, given the limited coverage of the operator's network. However, they said it would not help PCCW arrest its declining market share nor ease the fall in subscription prices.'This is one of CTI's many marketing tactics to gain subscribers ... but the competition will not be as bad as expected because most people don't have many choices of carriers,' DBS Vickers Securities analyst Wallace Cheung said. New World Telecom marketing director Thomas Leung also played down the impact, pointing out that only limited households would benefit from CTI's offer as the network was not available in all districts and most phone users were already locked into other contracts. CTI, the No3 fixed-line service provider, claims its network covers 40 per cent of Hong Kong's residential households. The aggressive promotion by CTI could help PCCW strengthen its argument to secure regulatory approval for greater flexibility in pricing. 'CTI will only add more ammunition to PCCW's argument to be allowed to cut prices themselves,' BNP Paribas Peregrine Securities analyst Voon San Lai said. PCCW has applied to the Office of the Telecommunications Authority to remove its status as a dominant carrier in fixed-line services for the business and residential sectors. In its latest promotion, CTI said it would charge users half the price they paid for other networks if they switched to its network. PCCW charges its residential subscribers $110 a month, while at the low-end is Hutchison Global Communications, which charges HK$83.80 a month. However, customers will have to sign a two-year contract and the half-price offer only applies to the first year. CTI, which had about 2.8 per cent market share last year, was expected to increase the figure to 7.8 per cent by the end of this year because of its price-cutting efforts, according to a DBS Vickers Securities estimate. CTI has about 160,000 fixed-line subscribers, leaving about 75 per cent of its capacity idle.