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Tuesday, June 26, 2007

T-Mobile UK – Swimming against the Tide

Unbelievably, T-Mobile UK is actually increasing their prepaid tariffs:
  • The basic X-net tariff (Everyone) goes up from 12p to 15p /minute and their flavour of on-net pricing (Mates rates) goes up from 5p to 8p /minute;
  • Text prices remain static; and
  • Browsing (Web ‘n’ Walk) charges are increased to a flat £1/day, rather than being usage based up to £1/day.
T-Mobile has recently been very aggressive in prepaid pricing, however I think it is too early to call an end to the overall industry deflationary price spiral in UK Cellular.

I think T-Mobile's current advantages lie in the relative strength of the Flext package and their first mover advantage in the Web 'n' Walk initiative. I'm not sure that they are abandoning the prepay market, but more treating the base as a bit of a cash cow.

I’m guessing that the real reason for these price rises is that T-Mobile UK is under severe pressure from the parent to deliver substantial increased cash based earnings this year. A more obvious sign that this is the case is the reduced presence in the indirect contract acquisition market.

It will be extremely interesting to see if any of the other major players react.