Josh Taylor 

Telstra defends hike in mobile fees despite posting $2.1bn annual profit

CEO says price rises in mobile plans would not contribute to inflation and were necessary to deliver a ‘high quality experience’
  
  

A women uses her mobile phones as she walks past a Telstra sign in Brisbane
Telstra chief executive Vicki Brady says telecommunications pricing was not contributing to inflation. Photograph: Darren England/AAP

Telstra says its decision to hike the cost of mobile plans in line with Australia’s rising inflation will not also contribute to the problem, as the company reports a 13.1% increase in annual profits off the back of strong gains in the telco giant’s mobile business.

On Thursday, Australia’s largest telecommunications company reported an annual profit of $2.1bn, with total income of $23.2bn for the 2023 financial year.

There was strong growth in the company’s mobile business, with income up 8.3% to $10.3bn and an increase in the average revenue per user on postpaid mobile up from $48.53 to $51.15 a month.

Despite the strong result in mobile, Telstra announced in May it would increase its mobile postpaid plans in line with the consumer price index, which resulted in most plans increasing an average of $4 a month from 4 July this year – after the period of financial reporting. The company at the time blamed the price rise on the increase in costs for businesses.

On Thursday, Telstra chief executive Vicki Brady defended the price rise, telling Guardian Australia that telecommunications pricing was not contributing to inflation.

“I would say in terms of mobile pricing, if you look at the [Australian Bureau of Statistics] CPI data, you’ll see that telecommunication services have gone down in real terms over the last few years,” she said. “So I don’t see telecommunications, pricing, contributing to inflation.”

Brady said customers increasingly rely on connectivity, and there is great demand on Telstra’s mobile network which required a lot of investment.

“That does mean we need to make those choices and decisions to have pricing at a sustainable level to be able to invest in and deliver that high quality experience for our customers.”

An Australian Communications Consumer Action Network (Accan) survey in March this year found 26% of people believed their phone and internet costs were unaffordable, with one in five reporting they had missed a payment for a phone or internet service because they could not afford it.

Telstra’s group executive for consumer and small business, Brad Whitcomb, said after the price hike announcement, there had been some turn away from Telstra’s postpaid mobile offering, but it was in line with the company’s expectations, with many either shifting to lower plans or with a Telstra reseller offering lower prices.

“This is a brief period of a turn as a result of the price rise. We do see some customers leaving Telstra full stop, but we are capturing a number of those customers either into (Telstra’s discount brand) Belong or into our [reseller base].”

Brady said the mobile business remains core to Telstra’s growth strategy in the coming years.

 

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