Telstra lifts prices amid cost-of-living crunch
By David Swan
Telco giant Telstra has raised the prices of its mobile phone plans by as much as 4 per cent, amid a cost-of-living crunch and two months after it announced mass lay-offs across its workforce.
Telstra on Tuesday announced it would lift prices across its postpaid and prepaid plans on average by between $2 and $4 a month, with postpaid prices rising in August and prepaid prices in October.
Telstra chief executive Vicki Brady said that by cutting up to 2800 jobs, the telco would save $350 million.Credit: Ben Symons
The telco said the rises were necessary to help it maintain investment in its mobile coverage, network performance, local support and security.
“Changing our prices is always a difficult decision, especially in the current climate,” Telstra executive Brad Whitcomb said in a statement.
“But if you look at the broader context around pricing, data from the Australian Bureau of Statistics shows that telecommunications pricing, which covers all telecommunications equipment and services beyond just mobile price, have not increased for consumers anywhere near the rate of other consumer household goods and services over the last decade.
“In fact, according to this data in eight of the last 10 years, those prices have actually deflated.”
Telstra in May axed annual price rises linked to inflation, instead adopting a flexible approach, meaning it could deliver higher – or lower – price changes than inflation moving forward.
At the same time it announced cuts to 9 per cent of its workforce, citing rising inflation and energy costs as well as tough market conditions. Telstra chief executive Vicki Brady said that by cutting up to 2800 jobs, the telco would save $350 million.
The nation’s “big three” telcos – Telstra, TPG and Optus – have now all lifted their prices in recent months, in many cases higher than the rate of inflation.
New research provided to this masthead shows that those price rises are now starting to bite, heaping stress on telco customers amid ongoing cost-of-living pressures.
A YouGov study commissioned by challenger telco Amaysim of just over 1000 Australian telco customers found 28 per cent have struggled to pay their mobile phone bill at least once in the past 12 months, including two in five (40 per cent) of Gen Z customers and 37 per cent of Millennials.
Parents with children or teenagers are among those most affected: customers with children under 18 at home are more than twice as likely to struggle to pay their phone bill.
“This is a sizeable number,” Amaysim’s recently appointed vice president, Vir Indernath, said.
“Consumers are looking at value propositions and they’re looking for more affordable, simpler options. And value can mean a lot of things; it may come in the form of being more affordable, or other features, like unlimited data banking for example.”
Amaysim vice president Vir Indernath.
Vodafone, which is owned by TPG, kicked off its price rises in January, lifting its monthly mobile phone fees by between 6 per cent and 9 per cent, citing the “high costs of doing business”. Many of its customers are now paying an extra $48 each year for their plan than they were a year ago.
In May, Amaysim’s parent company Optus quietly lifted the price of many of its monthly phone plans for the first time in two years. It raised prices by between 5 per cent and 6 per cent – increasing the price of its cheapest postpaid plan from $49 for 30 gigabytes of data to $52 for 50 gigabytes of data.
“Due to the increasing costs to maintain and provide a great network experience, we’ve made the difficult decision to increase the price of some of our mobile plans,” an Optus spokesman said at the time.
The most recent data from the competition watchdog shows Telstra remains Australia’s dominant mobile player, with a 44 per cent market share, with Optus commanding 31 per cent and TPG third, with 17 per cent.
Carol Bennett is chief executive of Australian Communications Consumer Action Network (ACCAN), the lobby group representing telecommunications customers.
“ACCAN is disappointed to see any increase in plan prices when so many Australians are doing it tough,” Bennett said. “Consumers are facing higher prices on their mobile and internet plans, and data from Amaysim confirms what we have been hearing for some time – people are struggling to keep up.
“People on lower incomes or people experiencing vulnerability are disproportionately affected by price increases. We welcome Telstra maintaining the price of their Starter plan and continuing concessional discount rates.”
Bennett said that consumers had new financial hardship protections which came into effect in March, and could tell their telco they’re struggling to pay a bill to receive support.
Amaysim is a mobile virtual network operator (MVNO) – company that does not own a mobile spectrum licence but sells mobile services under its own brand name using the network of a licensed mobile operator.
In Amaysim’s case, it uses the Optus network and is fully owned by Optus, which purchased the company in late 2020.
“We’re fortunate in that for example, Optus had a data security issue, we didn’t face it because we are a completely different [technology] stack,” Indernath said. “But most importantly, having Optus as a parent helps us get to 5G and NBN much more strongly, turn them into great value, and package them under the Amaysim brand for our customers.
“It’s really the best of both worlds.”
MVNOs often offer cheaper prices than the likes of Telstra or Optus, given they lease wireless capacity at wholesale prices then resell it to customers under their own brand. They can do so because they do not own or maintain their own infrastructure.
Amaysim’s research found a lack of awareness about MVNOs, however: only half of Australians agree that smaller mobile telco providers offer more value for money compared with the big three.
“Consider how much data you use each month and select a plan accordingly,” Bennett said. “MVNOs such as Aldi, Belong and Boost can sometimes offer similar coverage to major providers at reduced prices.”
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