Ad-funded mobile firm to enter 3 European markets

By Tarmo Virki

HELSINKI (Reuters) - The world's first advertising-funded mobile telecoms operator, Blyk, will enter the German, Spanish and Belgian markets next year, the firm said on Wednesday.

Finnish-British Blyk offers a number of free calls and text messages to 16 to 24 year olds in return for users accepting advertisements.

The company is a pioneer among wireless carriers, which are only slowly entering the mobile ad market, helped by new technologies and the spread of more advanced phones.

Strategy Analytics analyst Nitesh Patel said Blyk's continued growth depended on demonstrating value to advertisers through superior ad response rates, growing its highly targeted subscriber base, and learning more about its customers.

"The reality is that advertisers are still testing the waters of the nascent mobile ad market," he said.

Closely-held Blyk opened the service last year in Britain and a launch in Netherlands is scheduled for later this year.

Germany and Spain are among Europe's biggest ad markets and Belgium's ad spending per capita is among the region's highest, Blyk's co-founder and chairman, Pekka Ala-Pietila, told Reuters.

The top German mobile operators -- Deutsche Telekom's (DTEGn.DE) T-Mobile, Vodafone Group Plc (VOD.L), KPN's (KPN.AS) E-Plus and Telefonica's (TEF.MC) O2 -- are competing hard on price, driven by E-Plus, which owns a host of budget brands.