At an April 27 meeting, ČT's shareholders will decide details of the merger, announced March 1. The new company will be named Telefónica O2, taking its name from Spanish telecom giant Telefónica, which bought ČT last year.

"ČT and Eurotel's merger will help the two make better use of their common capacity in terms of offering combined fixed-line and mobile services," said Robert Nešpůrek, a partner at law firm Havel & Holásek. "For alternative operators, however, it will be hard to compete with this combination of services."

Telefónica O2's strategy would be to converge fixed-line and mobile services in packages, according to Andrei Torriani, Eurotel's chief commercial officer. He said the new company will offer a so-called quadruple play, or packages that include broadband Internet, content and fixed-line and mobile services.

This could pose a problem for alternative providers, as ČT owns the vast majority of the country's fixed-line network. Alternative telecom providers for the most part can't do business without leasing ČT's lines.

Many are concerned about the possibility that the company that emerges from ČT and Eurotel will create packages that heavily discount certain products. Alternative operators wouldn't be able to compete because they are renting the lines.

In some cases, such "cross-subsidizing" of services is illegal and alternative providers could complain to the market regulator, the Czech Telecommunications Office (ČTÚ).

But Naveed Gill, general director of alternative operator Tiscali, said the merger would make it more difficult for the ČTÚ " to identify cross-subsidizing of services."

Stefan Langer, CEO of alternative operator Etel, echoed his point.

"[ČT and Eurotel] can merge as long as they make sure they don't bundle their services in such a way that they cannot be copied by anybody else ... with a competitive offer," he said.

Merging fixed-line and mobile services is currently a trend among telecommunications companies in the United States and Europe. For example, AT&T announced March 5 plans to acquire BellSouth.

The acquisition would give AT&T full control of Cingular, the United States' largest mobile operator, in which AT&T and BellSouth now hold partial stakes. This trend is just starting here.