Telstra has increased the prices of its phone plans – can other mobile networks follow?
Australia’s largest mobile operator is raising the cost of its monthly phone bills, but could cash-strapped customers on other networks soon face the squeeze too?
Telstra announced this week that monthly mobile costs would increase by $3 to $4 from July 1.
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The telco giant said the change would affect new and existing customers, which was justified as being “in line with the consumer price index”.
Telstra noted further price pain, saying, “Subscription pricing will include annual review and may increase annually” with inflation.
Australian inflation has hit its worst in more than two decades as millions face a rising cost of living.
The country grapples with an energy crisis, with households seeing significant bill hikes from July 1.
Aussies grapple with more costs as the country’s largest mobile network raises prices.
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Telstra’s move has left customers of other telco giants wondering if they, too, will face an uptick as households continue to struggle with the rising cost of living.
At this stage, analysts predict that TPG Telecom will not follow suit just yet, due to Vodafone’s small market share and the ongoing battle to enter into a network-sharing agreement with Telstra in regional Australia.
But Optus may be a different story.
Financial analyst Eric Choi said it is “highly unlikely” that TPG will increase its prices as its mobile market share of 17 percent is below target, with Telstra dominating at 44 percent and Optus at 31 percent.
On the other hand, Optus had “left its options open,” Choi told Australian Financial Review.
Analysts say an annual inflation-related price hike would be positive for the sector. But customers may not feel the same. Credit: Tumana/Getty Images/iStockphoto
The service announced last week that it would start charging subscribers for Optus Sport beginning August 1.
The move received massive backlash from Australian English Premier League fans, with Optus being the sole provider since Fox Sports lost its broadcast rights six years ago.
Since then, subscriptions to the service have been offered as a bonus for simply being an Optus customer. But as of August, it now costs an additional $6.99 per month or a jump from $14.99 to $24.99 for non-mobile subscribers.
Kane Hannan of Goldman Sachs said Optus strongly suggested it would track price increases from competitors when owner Singtel released its full-year results last week.
The stock research analyst said CPI-linked prices would be a positive trend in the industry.
“CPI-linked pricing would be very positive for industry rationality as it would mean annual price increases are opted out rather than opted in, so [it] would become more common,” he told AFR.