Telstra has long traded on its claim to have better \u2013 and far more expansive \u2013 mobile coverage than its rivals to justify a steep pricing premium that has accelerated in recent years.<\/p>\n
But the telco\u2019s latest changes, which include steep price hikes and the closure of its cheaper \u201cstarter\u201d plan to new users, combined with a dramatic rejection of its coverage claims by the industry regulator, risk putting off many of its traditional customers, according to consumer advocates.<\/p>\n
Telstra recently announced sweeping price changes including raising monthly charges on its mobile plans, a big money printer for Australia\u2019s biggest telco.<\/p>\n
Telstra\u2019s standard monthly mobile plan will increase from $70 to $74 for 50GB of data, representing an aggressive second price hike in less than a year.<\/p>\n
Its announcement cleared the path for rivals, including Optus, to make similar increases. TPG-owned Vodafone has also announced some price changes.<\/p>\n
This is all happening at the worst possible time for consumers, many of whom are grappling with rising mortgage rates and volatile petrol prices, while inflationary pressures are reigniting.<\/p>\n
Telstra increased its retail mobile customer accounts by 581,000 during its most recent six-month reporting period. Photograph: Bianca de Marchi\/AAP<\/p>\n
Investment bank UBS recently observed that many retailers, including telcos, don\u2019t yet believe that consumers are under enough financial strain to dramatically change their spending habits, which is allowing them to push through price rises.<\/p>\n
Indeed, Telstra increased its retail mobile customer accounts by a robust 581,000 during its most recent six-month reporting period, although that was before interest rate increases took hold and before petrol prices rocketed.<\/p>\n
Carol Bennett, the chief executive of telco consumer advocacy group ACCAN (Australian Communications Consumer Action Network), says the telco\u2019s price rises are \u201cunreasonable\u201d given it is reporting strong profits. Telstra shares are also trading near decade highs, up about 25% over the past 12 months alone.<\/p>\n
\u201cThis is starting to become a pretty significant draw on people\u2019s overstretched budgets, especially those on lower incomes,\u201d Bennett said.<\/p>\n
\u201cIt\u2019s disproportionate because customers shouldn\u2019t be spending more than 2% of their budget on connectivity and Telstra is asking people to choose between that and other things like food and petrol and essential items.\u201d<\/p>\n
Climbing profits<\/p>\n
While Telstra has always charged a premium for mobile services, the pricing gap used to be less and it historically offered more data than rivals to help compensate for its higher prices.<\/p>\n
Rewind to 2022 and Telstra offered 40GB on its standard mobile plan, compared with Optus\u2019 30GB, and charged just $9 a month more, according to analysis by Canstar Blue.<\/p>\n
After the latest increases take effect, Telstra will charge $14 a month more than Optus on that same plan but provide 10GB less.<\/p>\n