Telefónica Deutschland was the first provider to announce a price increase for its new customer tariffs.
(Photo: Reuters)
Hamburg While consumer prices in Germany rose more sharply in the past year than they have in decades, the market for telecommunications services has so far hardly been affected by the rise in prices. That should change now: With Telefónica Deutschland, the first company in the industry has announced significant price increases.
The basic prices in mobile communications should therefore increase by up to ten percent in the spring for group brands such as O2 or Blau. That said Markus Haas, CEO of Telefónica Germany, the Handelsblatt. “Unlike in the past, more performance at the same price is no longer possible,” explained Haas. For this are about the necessary Investments in grid expansion too high.
Haas is alluding to the practice of mobile phone providers that has been common up to now. With largely stable basic prices, these have integrated more and more flat-rate services such as telephone calls, streaming access or increasing data volumes into their tariffs.
The price increases should apply to all new contracts. Existing customers have a special right of termination in the event of increases. According to Haas, the inclusive services will be improved at the same time. Unlike before, all O2 contract tariffs now include access to the particularly fast 5G network. It’s not “about flat surcharges,” explained Haas. You will start shortly with the prepaid offers.
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The increases are likely to have a direct impact on the return despite the expanded services. Even if the total amount of data transmitted in mobile communications increases every year, this will remain the case lots customers lag behind the high inclusive volume of their tariff. Their increase is correspondingly irrelevant. At Telefónica, for example, less than ten gigabytes per SIM card were accessed per month on average.
Telekom and Vodafone could also soon raise prices
Haas’ move is not unexpected given wage increases and rising energy prices, but it marks a turnaround for the industry. So far, only Telekom Germany boss Srinivasan Gopalan had promised higher retail prices. However, he remained relatively vague. “All options” are open, said a spokesman on request.
Insiders expect that Vodafone will also adjust some prices upwards over the course of the year. Corresponding specifications from the headquarters in London are to be implemented. A spokesman for Vodafone Germany declined to comment on future pricing.
The telecom companies face rising costs for expanding their infrastructure. According to its own statements, Telekom has been groaning under up to 20 percent higher civil engineering costs for fiber optic expansion since 2022. Higher energy prices are also having an impact. When it comes to electricity, however, the group has “hedged itself with futures contracts at good prices” until 2024, according to a spokesman.
The competition was less well prepared. Telefónica Deutschland states that in the current year its Wanting to keep spending on electricity stable, primarily with the help of efficiency measures – despite higher prices and increasing data throughput. In 2022, energy expenditure had already risen to around 210 million euros.
Vodafone recently announced that the group expects to spend around 500 million euros more on energy expenditure at group level by 2024. However, what this means specifically for Germany remains unclear. Insiders speak of falling cash flows and a correspondingly tense financial situation, which a spokesman did not want to comment on.
The competition among the major telecom providers in Germany is fierce. The companies are accordingly cautious and generally refrain from regular price increases. The result: Average monthly sales per customer have mostly fallen across the industry in recent years or at best remained stable.
When it comes to mobile communications in particular, consumers are relatively quick to switch providers – especially since there are usually attractive poaching offers. Despite the announced increases, these would still be possible with O2, it said.
“Unlike in the past, more performance at the same price is no longer possible.”
(Photo: Photothek/Getty Images)
In other European countries like Spain, telecom companies have already adjusted their prices. Vodafone boss Nick Read, who recently resigned, even announced broad-based increases in line with the consumer price index in November. However, local market conditions should be taken into account, he said.
“New wave of growth in mobile communications”
Telefónica Deutschland was particularly able to held up well and grew faster than its competitors in mobile communications. The Munich-based company is currently number two in the market after Deutsche Telekom.
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CEO Haas wants to continue to grow in the current year. The possibility of paying off high-priced end devices such as the Apple iPhone over 48 months instead of 24 should, for example, attract new customers. “The next wave of growth in mobile communications is upon us,” he said. However, Telekom is primarily focusing on combination offers and its new “MagentaMobil” tariffs, which offer second, third or fourth tickets at particularly low prices.
More: Weak development in Germany too – Vodafone boss resigns at the end of the year