The threat of EU legislation has spurred Vodafone into slashing the cost of using a mobile phone abroad as the world’s largest mobile phone operator confirmed on Monday that it planned to reduce roaming charges in Europe by 40 per cent.
Vodafone, the world’s largest mobile phone operator, said on Monday that it planned to cut the cost of roaming by at least 40 per cent by April next year, with the average cost falling from €0.90 to less than €0.55 a minute.
“The European Commission and European Parliament have made it clear that they expect to see change. Our announcement [on Monday] shows that the market, led by Vodafone, is meeting those expectations by providing what our customers tell us they want,” said Arun Sarin, Vodafone chief executive.
The company also said it planned to enter wholesale arrangements with other operators outside of the Vodafone group who will agree to reciprocal charges of €0.45 a minute or less.
In March, Viviane Reding, the EU commissioner from Luxembourg, unveiled a plan to get rid of the high charges levied by mobile phone companies on using phones abroad, saying: “It is unacceptable that consumers are punished in their phone bill just for crossing a border within the EU.”
The commission proposal would see the cost to consumers of local and international calls reduced to the same level they would pay at home.
Last week, mobile phone company executives complained that the legislation was unnecessary and that competition was already driving down the cost of calling from abroad.
Jim McCafferty, telecoms analyst at Seymour Pierce, said: “The EU have been making pronouncements on this for some time and the mobile operators will want to make a marketing opportunity out of any legislation.”
He added that although roaming has been highly profitable, it has only made up a small percentage of group revenues and that any cut in charges was likely to result in an big increase in volume.
O2, the British mobile phone operator that recently acquired by Telefónica, the Spanish mobile phone giant, said on Monday that as part of a global company, it could now offer a better roaming proposition to customers and that it would be in a position to announce its plans over the next couple of weeks.
Meanwhile, T-Mobile said on Monday that it planned to launch a new roaming service in June that would charge all UK customers, including pay-as-you-go, a flat fee of 55p per minute to make and receive calls from 29 European countries, the US and Canada, in a move that challenges Vodafone’s current Passport service that charges customers who sign up to the service their normal home tariff plus 75p per call.
In mid-morning trading in London, Vodafone shares were down 0.75p at 127¼p.