Friday, August 22, 2008

UK - Vodafone raising call charges

Vodafone to raise minimum call rate by 25%

Vodafone is to increase its minimum British call charges from September by at least 25 per cent, and by as much as 50 per cent for some customers.

The increase has been implemented as the world's largest mobile operator by revenue wrestles with how to counter slowing UK sales, which are being held back as consumers tighten their spending.

Vodafone is the second largest mobile operator in the UK, behind O2 .

The minimum call charges will rise from 10p to 15p for calls made outside the contracted "bundles" of minutes that customers get as part of their monthly contract.

Pay-as-you-go customers will see a rise in minimum call charges from 12p to 15p.

Minimum charges for calls made to 0800 and other non-geographic numbers are also set to increase from 15p to 20p.

Vodafone said almost all of its customers would see an increase in their bills of less than 10 per cent.

The company has recently alerted customers to the prices rises through letters in their bills, as well as by text to pay-as-you-go customers.

Last month, Vodafone issued a revenue warning, admitting that the economic downturn was hurting its UK and Spanish businesses. The shares fell almost 14 per cent on the day of the warning. Yesterday, they rose 0.2p to 139.85p.

Analysts said that many UK mobile customers have more minutes in their bundles than they normally use in a month, reducing the impact of this price rise to most consumers.

But the level of competition in the UK mobile market means Vodafone would struggle to raise its monthly contract fees without alienating potential customers. An out-of-bundle price rise, such as the one it is introducing, is a fairly common tactic to bolster margins among all mobile telecoms companies.

"It's one course of action they can take to stem the tide on the revenue line," said John Davies, an analyst at Dresdner Kleinwort.

Even though pricing is set according to the specific requirements of the local market, another analyst said he "would not be surprised" if similar changes were introduced elsewhere in Europe.

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