its rivals will not link rates to the CPI, but will study measures if their costs continue to skyrocket
Vodafone will become in 2023 the first telecommunications operator to update its rates based on the evolution of inflation in Spain. And at the moment it seems that she will be the only one, since none of its main rivals in the country plan to follow in the footsteps of the British company and apply a price revision based on the year-on-year CPI.
However, the fact that they are not going to link their rates to the behavior of inflation does not mean that the clients of companies such as Movistar, Orange or MásMóvil cannot see later an increase in your bill for telephone services due to the increase in costs which operators must face.
Sources from the sector have explained to EL ESPAÑOL-Invertia that the rise in energy or the impact of high inflation on wages or on contracts with suppliers mean that your financial situation is “unsustainable” and they do not rule out applying other measures in the future such as returning to price increases in exchange for more services.
Update with the CPI
Vodafone has surprised this Wednesday with the announcement of its intention to review your rates automatically each year according to the evolution of the IPC“in a predictable and completely transparent way for its clients”, a measure that will begin to be applied in 2023.
The company will establish the increase taking into account the official figure of the average interannual CPI, calculated from October of the previous year to September of the current year. Vodafone will introduce this clause in new contracts this week and will gradually communicate it to existing customers over the next few weeks.
Consulted by this newspaper, companies such as Telefónica, Orange or MásMóvil have refused to comment whether they will follow in the footsteps of Vodafone or have indicated that at this time no decision has been made in this regard.
Some operators such as Telefónica have already included in contracts for a long time a clause that would allow them to update the amount they charge for their services based on the evolution of the CPI. However, the measure is not applied automatically and, to date, Telefónica has never availed itself of this possibility.
The telecommunications sector has shown deflationary behavior in the last two decades, as the operators have repeatedly pointed out and this is reflected in the data from the National Institute of Statistics. However, this does not mean that during this time there have been no price increases.
In fact, On several occasions, companies have resorted to what is popularly known as ‘more for more’. A formula that consists of raising the price for the customer in exchange for improving its offer, for example, increasing the volume of mobile data or television content or increasing the speed of fiber.
Sources in the sector have indicated that, in the event that inflation persists at such high levels in the coming months, this could be a measure that operators resort to to deal with this scenario of skyrocketing prices.
Thus, they have stressed that they have different alternatives to review the prices they charge their customers and not only link their rates to the behavior recorded by the Consumer Price Index.
[La sostenibilidad del sector de ‘telecos’, en jaque por no repercutir la inflación en sus precios y el bajón de ingresos]
Until Vodafone’s announcement this Wednesday, no company had dared to modify its rates in the current scenario of high inflation, but both in public and private interventions have shown their concern about the current scenario.
In statements to EL ESPAÑOL-Invertia, industry sources indicate that the situation is “unsustainable”, since the cost base of these companies has been increasing considerably in recent months as a result of the adverse macroeconomic scenario.
Specifically, they are penalized for elements such as rising energy prices (despite the fact that many have long-term contracts with their providers), salary costs, contracts with providers or rentals of the sites where they install their antennas.
For this reason, all telecommunications companies are closely monitoring the current situation and will take action based on how it evolves. “Having high inflation for three months is not the same as having it for one year“, they add from the sector.
Spain is not the first country in which a telecommunications operator applies revisions to its rates based on the evolution of the CPI. This is the case, for example, of United Kingdomthe country where Vodafone’s headquarters are located and in which the vast majority of companies have contracts that include clauses in this regard.
Other markets where these clauses are also frequent are the South American ones. For example, Telefónica does update the prices it charges its customers in Brazil and the countries of its subsidiary Hispam according to the behavior of inflation.
The reason is, however, very different from that of the United Kingdom or Spain. Is about historically inflationary marketsTherefore, these clauses do not seek to respond to a temporary situation, but rather to protect companies from the ups and downs of the macroeconomic situation.
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