Question 1

Why is our current pricing strategy failing to keep pace with the market?

Accepted Answer

The gap between sector pricing and the broader economy is at a historical high, with communications prices rising only 1.1% in the year to May 2023 against a 5.6% jump in general CPI. Long-term data shows telco hardware and services prices fell 24.6% between 2012 and 2023, while general inflation rose by more than 32.6%.

Question 2

Can we simply index our plans to inflation like they do in the UK?

Accepted Answer

Directly adopting the UK's 'CPI plus 3.9%' model is high-risk and has already triggered significant political and regulatory backlash. Australian operators must navigate a delicate environment where general inflation of 5.6% makes automatic, aggressive price hikes a target for government intervention.

Question 3

What is the most effective way to raise prices without losing customers?

Accepted Answer

A 'more for more' approach that bundles price increases with tangible plan upgrades is the most viable path to improving ARPU. This strategy mitigates the risk of backlash while addressing the fact that communications price growth currently lags general CPI by 4.5 percentage points.

Question 4

Is there any room left for cost-cutting to protect our margins?

Accepted Answer

Productivity gains and traditional cost-reduction measures have limited remaining upside for Australian operators. With communications prices having declined 24.6% over the last decade, the only sustainable path to offsetting rising labor and capital costs is a disciplined increase in service pricing.

Inflation linked pricing is a delicate balancing act

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Key Takeaways

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