But as the UK is finding, linking price rises to inflation can be a double-edged sword
Yettel has joined DT majority owned Magyar Telekom and Vodafone by raising its prices more than 15%, citing inflation. But while Hungarian consumers and businesses feel the pinch from the big rises, in the UK, regulator Ofcom is already proposing a new approach, whereby operators must spell out what the price rise will be, in pence and pounds, when a contract is signed, moving away from inflation-linked price rises during customers’ contracts.
Yettel told Telex that residential and small business subscribers can expect a 15.3% tariff change from 5 March 2024 due to the “annual inflation-based tariff adjustment”. Monthly per-minute and SMS charges will remain unchanged and the price of additional data subscriptions for residential subscriptions will not change. For small businesses, the change will affect the monthly and one-off additional service charges, while the monthly per minute and SMS charges will remain unchanged for these tariffs.
The operator told Telex that for tariff plans whose data allowance cannot be used in full in roaming tariff zone 1/EU and are affected by the tariff change, the roaming data allowance will increase from 5 March. Yettel will notify its customers of the inflation-linked fee adjustment via SMS or email.
Government figures blamed
Magyar Telekom released a statement suggesting it would implement a 15% annual, inflation-based price adjustment across its customer contracts as of 1 March 1. It pointed the finger at the Hungarian Statistical Office which it said on 12 January published the average consumer price index which amounted to 17.6% in 2023. In making the rise, the operator said it took into account “the economic and market developments as well as its customers’ interests.”
Meanwhile Vodafone told consumers that its inflation-tracking price adjustment based on the consumer price index, which will come into effect automatically in 2024, would have been set at 22.01%. However, it said “favourable economic conditions” had allowed it to “discount” the adjustment and will instead only put prices up 15.4% from 1 March 2024.
To ease the pain, Vodafone said it will also increase the amount of “certain discounts” by 15.4%. Customers will be notified of the affected discounts on invoices issued in mid-December-January. Volume discounts (Family) or individual discounts related to contract extensions are subject to change when purchasing multiple landline or mobile services. Band discounts, which are calculated as a % based on the monthly fee band, will not change, so the final monthly fee will also change. Vodafone’s e-pack discount is not affected, because if the e-pack payment conditions are not met, the operator would charge the customers a higher amount back in their next monthly bill.
All eyes now turn to Digi Hungary and other players in the market to see what they might do.
UK may end inflation linked rises
After hiking prices for mobile and fixed line by 14.4% last year – and being hit with a cost-of-living backlash – UK operator BT/EE announced it will move away from controversial inflation-linked price rises during contracts, spelling out price rises in pounds and pence.
BT/EE’s move comes after Ofcom proposed a new approach at the end of last year, whereby operators must spell out what the price rise will be when a contract is signed. After consulting further, Ofcom is due to publish its ruling in the next month.