Vodafone also vows to cut prepay subsidies


Vodafone will join O2 and Everything Everywhere in increasing prepay charges following Ofcom decision to scrap MTRs

Vodafone has followed Everything Everywhere and O2 by confirming it will start removing subsidies from its prepay handsets this month, in a bid to recoup lost revenues from mobile termination rates (MTRs).

The operator did not reveal how much subsidies would be cut by, but Mobile News understands the figure to be around 25 per cent.

The cost will now be picked up by Vodafone’s consumer base, which will face higher hardware costs.

A Vodafone spokesperson said: “Faced with the damage caused by the Government’s recent decision on mobile termination rates, we’ve been reviewing our subsidies on prepay handsets.

“We have no choice but to remove subsidies from prepay mobile phones from July onwards.

Its move follows Ofcom’s decision in March to cut MTRs, which will see all operators forced to cut the costs of connecting a cross-network call, from 4p per minute currently, to 0.69p per minute by 2015.

O2 CEO Ronan Dunne told Mobile News in May it was forced to remove subsidies, in some cases the full amount, to balance the books, as some customers are no longer financially tenable.

Everything Everywhere vice president of commercial trading Neil Macgeorge also confirmed in May that it too would begin to remove subsidies from its pre- pay range starting this month as a combined result of MTRs and box breaking.

Vodafone’s Q1 results, released in May, showed its prepay base fell by 258,000 in the quarter.

O2 and Everything Everywhere’s bases fell from 11.3 million to 10.8 million and from 7.4 million to 6.7 million from Q1 2010 to Q1 2011 respectively.