Proactive Investors - Vodafone faces a major test in April when its tariffs up by 14.4%, according to brokers at Credit Suisse, which said pricing was a major theme at a telecoms day it held recently.
Price linked to inflation in 2022 landed reasonably well on fixed/broadband services but on the mobile side there was a spin-down to cheaper options.
“It remains to be seen how they land in 2023 but we would note that Vodafone has recently hiked front-book mobile prices by about £3/month.”
UK disposable incomes are already under pressure given broader inflationary pressures, said the bank, though as yet there has not been a substantial spin-down or large-scale shift to social tariffs.
Even so, UK mid-contract price increases are currently being reviewed by regulator Ofgem and remain an important discussion topic for UK-focused investors.
Credit Suisse expects the upshot of the review to be transparency in future price changes rather than looking at what has already happened.
Elsewhere, consolidation in the UK telco sector is another important theme.
Vodafone and Hutchison’s Three remain in merger talks, though how the competition authorities will view a deal if it can be agreed “remains to be seen”.
Expansion of fast fibre broadband networks, meanwhile, continues, apace with altnets (alternative networks) ramping up and BT also picking up the rollout pace.
“We expect this, coupled with the more attractive wholesale pricing as part of Equinox 2, should lead to an acceleration in FTTH uptake during 2023.”
Altnets that lack scale, in particular, face growing consolidation pressure believes Credit Suisse,
Shares in Vodafone were down 1.9% today at 99.3p.