Vodafone warns of UK price rises and job cuts as inflation bites

Company’s 18 million UK mobile customers face 14% rise in mid-contract increases next spring

Vodafone has warned of price rises for UK customers and job cuts as the telecoms company launched a €1bn-plus (£879m) cost cutting plan to cope with soaring energy bills and inflation.

It said consumers would have to accept higher bills as it could not cover all its cost increases through a new multi-year cuts plan. It also lowered annual profit guidance in light of a €300m year on year rise in energy costs across the business.

“We can take cost action, you can see we are doing that but price has to play a role in order to have sustainability in the investments [in telecoms infrastructure] we make,” the Vodafone chief executive, Nick Read, said.

“There is a significant impact on energy and inflation [costs] as seen by lowering our guidance. Price is a key component of what we do, like every other sector. We are talking £1 or £2 a month on every bill. You can draw comparisons to mortgages or filling a tank of fuel for a car and I would say what we offer is tremendous value.”

Read said the company was raising prices in 11 of its 12 European markets, including the UK, where customers’ bills will go up annually by the rate of inflation as measured by the consumer prices index in January, plus 3.9%.

This means Vodafone, which has about 18 million mobile customers in the UK, will be raising bills by about 14% when the mid-contract price increases are implemented next spring.

Read said the other form of bill increases is known as “re-pricing”, under which customers are charged more in return for offers for additional data or services.

Companies including Vodafone and BT have been criticised for making billions from the above-inflation rises and the telecoms regulator Ofcom – which has said a record 8 million households have experienced difficulty paying their bills – has told internet companies to “think hard” about continuing to make large hikes.

Labour has said that if it is elected there will be a crackdown on mid-contract price increases, pointing out that broadband and mobile are the only utility sectors in which they are allowed. In sectors such as energy and gas suppliers cannot increase prices mid-contract unless there is a change in VAT rates.

Vodafone, which employs about 95,000 staff globally and 9,000 in the UK, said its cuts plan aims to “streamline and simplify our group-wide structure and further accelerate the digitalisation of our operations”.

Read would not be drawn on the level of job losses or from which markets or divisions they will primarily come, but he said some areas such as software services would receive an increase in headcount.

Asked about ongoing talks to merge Vodafone and Three – the UK’s third and fourth biggest mobile operators respectively – Read said that if a deal were reached it would need to be cleared by regulators to allow the companies to compete against their rivals BT, Virgin Media 02 and Sky.

A tie-up would catapult the newly combined company above their rival mobile networks EE and O2, with more than 27 million subscribers.

We need industrial scale at infrastructure level to compete with BT, Virgin 02 and Sky,” Read said. “This potential merger will not impact pricing in the market. If we remain sub-scale and returns remain where they are, we will not be able to pace the investments of the bigger players in the market.”

Earlier this month, BT warned of job cuts after it was forced to find more than £500m in additional savings as its energy bill would be £200m higher this year.


Mark Sweney

The GuardianTramp

Related Content

Article image
Vodafone boss to step down after sharp drop in share price
Nick Read will be replaced as CEO by finance chief Margherita Della Valle during search for successor

Mark Sweney

05, Dec, 2022 @11:45 AM

Article image
Vodafone confirms talks with Three UK about merger
Combined networks would be Britain’s biggest mobile operator, challenging EE and O2

Mark Sweney

03, Oct, 2022 @11:28 AM

Article image
‘France’s answer to Steve Jobs’ buys 2.5% stake in Vodafone
Opportunities to accelerate ‘streamlining’ of UK telecoms group’s business cited by investment vehicle

Mark Sweney

21, Sep, 2022 @3:25 PM

Article image
US firm Liberty Global buys stake in Vodafone after tumultuous year
‘Cable cowboy’ John Malone rules out takeover bid but says he believes UK telecoms company is undervalued

Alex Lawson

13, Feb, 2023 @6:52 PM

Article image
Vodafone is still not moving the dial for its unhappy investors | Nils Pratley
However much the telecoms company talks itself up it isn’t doing enough to rescue the share price

Nils Pratley

15, Nov, 2022 @7:13 PM

Article image
Vodafone has hung up on Nick Read, now it needs to set a radical tone | Nils Pratley
The complacent conglomerate desperately needs a free-thinking chief executive

Nils Pratley

05, Dec, 2022 @6:42 PM

Article image
UK’s broadband firms set for £1.7bn windfall with above-inflation price rises
Exclusive: annual bill increases are often several percentage points higher than the January CPI or RPI rate

Mark Sweney

07, Sep, 2022 @8:00 AM

Article image
Vodafone price rises unleash customer fury
Vodafone unveils 'rounding up' of monthly bills and doubling of internet rates

Rupert Jones

23, Sep, 2011 @10:02 PM

Article image
Mobile and broadband prices: UK watchdog reviews inflation-busting rises
Ofcom could implement tougher protections against hefty bill increases midway through contracts

Mark Sweney

09, Feb, 2023 @10:36 AM

Article image
Despite its optimism Marston’s pint glass is less than half full | Nils Pratley
Hope springs eternal in the boardroom, but the stock market is not as upbeat about the hospitality sector

Nils Pratley

06, Dec, 2022 @6:46 PM