Vodafone will raise its prices based on the IPC. It’s not as bad news for the customer as it seems

A few days ago, we learned of Vodafone’s decision Link your prices to the average CPI on an annual basis Starting next year. This action comes In full escalation of inflationwhich – which already exceeds 10%and, according to the operator, aims to ensure “long-term business sustainability”. And we can’t deny it: the telecom sector in Spain Not going through his best.

Vodafone’s decision will lead to an increase in its prices, but what appears at first glance to be negative news for its customers also has a positive side. Are we facing the first step towards the general rise of its competitors? At Xataka, we spoke with the rest of the operators to Know your position on this scale And see if they plan to do the same.

There will be price increases, but it will be more transparent

From 2023 Vodafone will correlate its prices in Spain to the average Consumer Price Index (CPI), Something he was doing a few months ago in the UK. Lowi customers and Vodafone customers who have contracted a social rate, ie the most vulnerable, are not included in the procedure.

The operator is already reporting it to its customers (who have 30 days to terminate the contract without any penalty) and thus confirms it to Xataka:

“Vodafone has adjusted its existing contract model with its customers due to the increase in the consumer price index and the consequent sequential increase in energy prices, costs, services and suppliers. In this way, the European operator will automatically link the evolution of CPI into its rates each year in a predictable and completely transparent way for its customers.

As we can see, they from Vodafone justify this measure by the increase in costs that occur, not only in the field of energy, but also in their suppliers. This increase in expenses is also accompanied by The need for investment growth To deploy 5G and fiber.

To this must be added a decline in service revenues due to the hyper-competitiveness of the sector, the price war and the market trend towards low cost.

this is The general downturn in the telecommunications sector (with Spaniards Pay less and less for tight packages) is in the midst of inflation this year, so we have the headline CPI which rose last year versus the telecom CPI which has fallen a little bit.

With this data, the accounts of the major carriers have been out of balance for a long time, and those of Vodafone Spain are no exception. The ERE 2021 Also means a good pinch in the lockers of the English player, and although sell hardware and the low momentum They help balance the balance a little, it’s not enough.

The evolution of income from Vodafone service in the past two years

Vodafone had to take some measures to deal with this situation, and one of them is Link your prices to the consumer price index on an annual basiswho argues thus:

“This measure seeks to enhance the long-term sustainability of the business and ensure the necessary resources for networks, products and services in Spain. In this sense, despite the strong growth of the sector year-on-year in terms of customers and data consumption, mobile phone prices have fallen by 32% since 2008, according to CNMC, with losses of more than 34% of revenue in the past 10 years and eroding business value by about 50%.”

Does this mean that there will be a price increase from January? Yes, but this increase will correspond to the consumer price index calculated between October of the previous year (2021) and September of the current year (2022). Therefore, it will be Clearer and more predictable For the user: You will know for sure that your price will go up, how much, when and why.

We will not deceive ourselves, there are increases in the main operators every year: 2021, for example, was marked by mandatory price increases in premium brands In exchange for more 5G and more unlimited dataAnd in 2022, we’ve also seen increases In old Movistar rates s orange.

By this scale, those €3 increases because it’s in February and €5 because October is over: Fiber and/or mobile rate will increase according to IPC. Like pensions, come on. In addition, this increase will be proportional to what you pay: higher increases for more expensive packages. Let’s take two examples to understand it:

• With an interannual CPI of 7%, an average of 30 euros per month would cost 32.10 euros per month.

• Using the same CPI between the years of 7%, an average of €100 per month would cost €107 per month.

The fact that Vodafone accompanies these rises in Various improvements in the form of gigabytes or speed (“more and more” strategy), it’s up to them. But at least increasing the bill will be more transparent to your customers. What if the CPI falls or we go into deflation? Vodafone undertakes to reduce the price rates. Let’s hope so, not only for the phone bill, but for the rest of the services and consumer goods.

Linking prices to the consumer price index, an example?

Is it possible for Vodafone’s competitors to also decide to link their prices to the CPI? Are we on the verge of a general rise in the rates of all operators? to get rid of doubt, We ordered directly from the rest of the operators What do you think of Vodafone’s decision and whether it plans to take action in this regard.

Telefónica and Orange refused to make any statement in this regard. Let’s remember, however, that Telefónica was included in their contracts long ago An item that would allow them to adjust the price This fee is for their services based on the increase in CPI (although they haven’t accepted it yet). O2, for example, sets it as we see in this snippet:

Where The most mobile group, they tell us that “to this day, we continue as we are and we have not made any decision on that at this time”. He told us something similar DIGIWe maintain our commitment to our customers by always offering them the best possible offer at the best possible price. Neither of them came to evaluate Vodafone’s procedure.

Who was “wet” was working fine. Its general manager, Javier Herrans, is clear: “Our policy is to maintain a competitive price offer and, in this sense, we will try to continue in this position without affecting the client’s IPC.”

And what does Finetwork do to alleviate the situation? According to Javier Herranz, “Be more efficient in all operations so as not to impact increases for our current and future customers.” However, he understands Vodafone’s decision: “Large groups have higher fixed cost structures and need to take other actions,” he tells us.

hard to guess What will be the trend in 2023But according to market sources, it wouldn’t be surprising if a lot of the sector ended up adjusting their prices according to the CPI to counteract income loss, massive inflation and needed investments in fiber and 5G. We’ll see what comes next year.