Is Vodafone profiting from the cost-of-living crisis? That is what a reader called Brendan O’Sullivan wanted to know after he received a text message from the company.
The message displeased him greatly as it announced that Vodafone was increasing his monthly bill by 11.2 per cent to reflect the current rate of inflation in Ireland.
“We are suffering a period of high inflation and yet ComReg seems to rubber stamp an 11.2 per cent price increase based on the CPI,” he says.
“The CPI has nothing but a passing relationship to the Vodafone cost base,” O’Sullivan suggests. “Have Vodafone increased wages by this percentage? What is their cost distribution and did they demonstrate the cumulative impact of inflation across all cost categories.”
O’Sullivan writes that if “life is going to be driven by the CPI, then tax bands, state benefits – unemployment, pension, etc – should also increase by the same percentage. Cost goes up but it’s matched. This, eventually, would be a path to disaster, but the ComReg approach is a dereliction of duty to protect consumers’ best interests. These consumers are the people of Ireland. On their behalf please review this and other similar agreements and find the brake and reverse option quickly.”
First off, ComReg cannot order a company to price their products in a particular fashion and it has no role in deciding what any company chooses to charge.
The problem rests with Vodafone. In the summer of 2021 it announced that it was linking the price of many of its packages to inflation, a practice which would have been dubious enough when the rate of inflation was 1 or 2 per cent but which is much worse when inflation is substantially higher than that.
The increase reflects the inflation rate recorded in December 2022, which was 8.2 per cent, plus 3 per cent. The additional 3 per cent increase is, the company says, to allow it to continue investing in its network and services
The move will see an average of €5 per month added to mobile bills, with fixed-line customers paying an additional €7 a month.
The price increases won’t affect all customers, with around 50 per cent of mobile customers facing the higher charges, and only 5 per cent of the company’s fixed-line customers paying the higher bills.
We contacted Vodafone and were assured it was not profiting on the back of the cost-of-living crisis. We were told it has faced the same energy and other inflationary costs that have caused such pain across the board and it pointed to substantial – and costly – improvements in its network and double-digit wage increases for its staff.