The rise in prices in telephone packages breaks records and reaches 6.2% so far this year

Packaged telephone services have raised their prices again in April and add up to an increase of 6.2% so far this year, the highest in the historical series, according to the National Institute of Statistics (INE).

This price increase has also been added to mobile telephony, which recorded another rise of 1.1 points for a total rise in the first four months of 2023 of 3.4%, driven by the price increases carried out by the three main operators during the first quarter.

The push of the telecommunications sector is a new ingredient that contributes to inflation in 2023, since in the last three years the prices of the sector had only fallen due to the hypercompetitiveness of the market.

In fact, mobile telephony continues to be 3.3% cheaper than in April 2022, after the price of these services has plummeted due to the impulse of low-cost operators and closed 2022 with a drop of 6, 4%.

The president of Telefónica, José María Álvarez-Pallete, lamented this week that telecommunications were the only European sector that had been deflationary in the last 25 years and called for a complete reform at the community level to promote innovation.

IMPACT ON ACCOUNTS

The operators are beginning to notice the impact of their new rates and the reduction of promotions in their accounts. The first of the big companies to present results was Orange, which registered a revenue increase of 2.8%.

The company chains a second consecutive quarter of ARPU increases (the indicator that reflects how much customers pay on average monthly) among its convergent customers.

The company applied a 3.42% price increase at the end of March, which is expected to push up both ARPU and revenues for the rest of the year.

For its part, Telefónica also increased its billing in Spain up to March (0.3%), while its ARPU increased by 1.7% to 92.6 euros, influenced by the increase applied in mid-January. The company also expects billing to continue to rise over the next few quarters, by accounting for the new prices during the entire quarter.

At the same time, customers have naturally received the increase in bills, which has translated into commercial performance that has even exceeded that of recent quarters in the case of Telefónica, which has registered the best performance in this section since the third quarter of 2020.

On Tuesday it will be Vodafone’s turn to show the impact of its new prices, since it will present the financial results of its fiscal year, ending in March.

A MARKET AT TWO SPEEDS

Despite the photograph transmitted by the INE, the reality of the market is far from homogeneous, since the ‘low-cost’ operators, led by Digi, continue to be the great dominators of the high-cost market.

Last Thursday, during the presentation of results, the CEO of Telefónica, Ángel Vilá, assured that, in the Spanish market, this double reality was consolidating: a more “rational” medium and high-end segment with little promotional intensity, compared to to a ‘low cost’ where he expected that there would continue to be tension.

“We see a lot of promotional effort right now (…) in addition to some initiatives to reduce prices by our competitors,” the CEO of MásMóvil, Meinrad Spenger, had previously pointed out in the presentation of the operator’s results.

Spenger also stressed that the company had not made significant price increases, beyond a few additional services.. “Customers have accepted these moves well and we don’t see a significant impact,” the manager added.

The CEO of MásMóvil also disassociated the company from future promotional efforts, citing the need to be “responsible” in the long term and resigning himself to losing money with cheaper competitors.