Wake-up call: how Telstra’s ‘unreasonable’ price rises may cause customers to hang up

## Summary
Telstra’s aggressive price rises have cleared the path for rivals, including Optus, to make similar increases. Photograph: Hollie Adams/Reuters View image in fullscreen Telstra’s aggressive price rises have cleared the path for rivals, including Optus, to make similar increases. Photograph: Hollie Adams/Reuters Analysis Wake-up call: how Telstra’s ‘unreasonable’ price rises may cause customers to hang up Josh Taylor and Jonathan Barrett The telco’s sweeping price changes and the closure of its cheaper ‘starter’ plan risk putting off many of its loyal customers Telstra has long traded on its claim to have better – and far more expansive – mobile coverage than its rivals to justify a steep pricing premium that has accelerated in recent years. Optus’s high-profile network failures in recent years have robbed consumers of a genuine competitor to Telstra, allowing the bigger telco to entice customers from its rival and more confidently lift prices.

## Article Content
Telstra’s aggressive price rises have cleared the path for rivals, including Optus, to make similar increases.
Photograph: Hollie Adams/Reuters
View image in fullscreen
Telstra’s aggressive price rises have cleared the path for rivals, including Optus, to make similar increases.
Photograph: Hollie Adams/Reuters
Analysis
Wake-up call: how Telstra’s ‘unreasonable’ price rises may cause customers to hang up
Josh Taylor
and
Jonathan Barrett
The telco’s sweeping price changes and the closure of its cheaper ‘starter’ plan risk putting off many of its loyal customers
Telstra has long traded on its claim to have better – and far more expansive – mobile coverage than its rivals to justify a steep pricing premium that has accelerated in recent years.
But the telco’s latest changes, which include steep price hikes and the closure of its cheaper “starter” 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.
Telstra recently announced sweeping price changes including raising monthly charges on its mobile plans, a big money printer for Australia’s biggest telco.
Telstra’s 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.
Its announcement cleared the path for rivals, including Optus, to make similar increases. TPG-owned Vodafone has also announced some price changes.
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.
View image in fullscreen
Telstra increased its retail mobile customer accounts by 581,000 during its most recent six-month reporting period.
Photograph: Bianca de Marchi/AAP
Investment bank UBS recently observed that many retailers, including telcos, don’t yet believe that consumers are under enough financial strain to dramatically change their spending habits, which is allowing them to push through price rises.
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.
Carol Bennett, the chief executive of telco consumer advocacy group ACCAN (Australian Communications Consumer Action Network), says the telco’s price rises are “unreasonable” given it is reporting strong profits. Telstra shares are also trading near decade highs, up about 25% over the past 12 months alone.
“This is starting to become a pretty significant draw on people’s overstretched budgets, especially those on lower incomes,” Bennett said.
“It’s disproportionate because customers shouldn’t 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.”
Climbing profits
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.
Rewind to 2022 and Telstra offered 40GB on its standard mobile plan, compared with Optus’ 30GB, and charged just $9 a month more, according to analysis by Canstar Blue.
After the latest increases take effect, Telstra will charge $14 a month more than Optus on that same plan but provide 10GB less.
Optus’s high-profile network failures in recent years have robbed consumers of a genuine competitor to Telstra,
allowing the bigger telco to entice customers from its rival
and more confidently lift prices.
Telstra says its price increases are necessary because it must invest in the “performance, reliability and security” of its mobile network.
This includes expanding and upgrading its 5G network, and improving measures to protect customers from scams, Telstra says. The telco says the communications sector has delivered increased services and falling prices for consumers – in real terms – over the past decade.
Telstra’s financial results have been strong. It has recorded steady growth in mobile revenue, carries modest debt levels and has participated in significant share buybacks; a practice used to distribute excess cash.
It recorded a near 10% lift in net profit at its most recent half-year results, to $1.2bn.
Tara Donnelly, utilities editor at Canstar Blue, says while the big telcos point to network investment to justify recent increases, that’s no reason for customers to foot the bill.
“Instead, consumers should take these hikes as a signal to shop around,” Donnelly says. “Better plans and prices are available but only for those who look for them.”
Telstra will be hoping that some customers simply switch into its lower cost brands, such as Boost and Belong; although prices are being hiked there also.
The Acma ruling
Telstra’s steep premiums may have just got harder

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## Expert Analysis

### Merits
- 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.
- Carol Bennett, the chief executive of telco consumer advocacy group ACCAN (Australian Communications Consumer Action Network), says the telco’s price rises are “unreasonable” given it is reporting strong profits.
- Telstra shares are also trading near decade highs, up about 25% over the past 12 months alone. “This is starting to become a pretty significant draw on people’s overstretched budgets, especially those on lower incomes,” Bennett said. “It’s disproportionate because customers shouldn’t 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.” Climbing profits 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.
- Telstra’s financial results have been strong.

### Areas for Consideration
- Photograph: Hollie Adams/Reuters Analysis Wake-up call: how Telstra’s ‘unreasonable’ price rises may cause customers to hang up Josh Taylor and Jonathan Barrett The telco’s sweeping price changes and the closure of its cheaper ‘starter’ plan risk putting off many of its loyal customers Telstra has long traded on its claim to have better – and far more expansive – mobile coverage than its rivals to justify a steep pricing premium that has accelerated in recent years.
- But the telco’s latest changes, which include steep price hikes and the closure of its cheaper “starter” 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.
- Telstra shares are also trading near decade highs, up about 25% over the past 12 months alone. “This is starting to become a pretty significant draw on people’s overstretched budgets, especially those on lower incomes,” Bennett said. “It’s disproportionate because customers shouldn’t 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.” Climbing profits 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.

### Implications
- Photograph: Hollie Adams/Reuters Analysis Wake-up call: how Telstra’s ‘unreasonable’ price rises may cause customers to hang up Josh Taylor and Jonathan Barrett The telco’s sweeping price changes and the closure of its cheaper ‘starter’ plan risk putting off many of its loyal customers Telstra has long traded on its claim to have better – and far more expansive – mobile coverage than its rivals to justify a steep pricing premium that has accelerated in recent years.
- Telstra’s 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.
- Photograph: Bianca de Marchi/AAP Investment bank UBS recently observed that many retailers, including telcos, don’t yet believe that consumers are under enough financial strain to dramatically change their spending habits, which is allowing them to push through price rises.
- After the latest increases take effect, Telstra will charge $14 a month more than Optus on that same plan but provide 10GB less.

### Expert Commentary
This article covers telstra, price, coverage topics. Notable strengths include discussion of telstra. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1079.