Vodafone Plans To Cut European Roaming Fees Next Year
LONDON (Dow Jones) - Under pressure from European regulators, British mobile-phone giant Vodafone Group on Monday said it will slash fees charged to customers for calls made while traveling in Europe by at least 40% next year.
The move comes less than two months after the European Commission unveiled proposals to curb the amount that phone companies can charge consumers when they're away from their home countries.
Under the EC proposals, consumers would no longer be charged for receiving phone calls while abroad, and customers wouldn't pay a higher tariff just because they are traveling.
Data compiled by the European Commission before it unveiled its proposals showed that for a four-minute call, roaming prices varied from as little as 0.20 euros for a Finnish consumer calling home from Sweden to 13.05 euros for a Maltese customer calling Latvia.
The recommendations, which threaten 10 billion euros in annual revenue for companies such as Vodafone and Telefonica SA (TEF) , come at a time when wireless operators face slumping sales and stiffening competition in mature European markets.
If approved by EU governments and the European Parliament, the new rules could be in force as early as the middle of next year.
By announcing the cuts in its European roaming tariff, Vodafone is seeking to regain the initiative.
"The European Commission and European Parliament have made it clear that they expect to see change," said Vodafone Chief Executive Arun Sarin in a statement.
"Our announcement today shows that the market, led by Vodafone, is meeting those expectations by providing what our customers tell us they want. Also, by addressing both retail and wholesale prices, we are providing a platform for sustainable, lower retail prices across Europe in the future," he added.
The E.C. on Monday said it welcomes any initiative that aims to lower roaming charges but added would still push ahead with its own agenda for reform.
"It's a good sign for the industry, but more needs to be done at the E.U. level," said spokesman Frederic Vincent.
Vodafone shares slipped 0.2% in London morning trading.
Vodafone, which operates phone networks in Germany, Italy and Britain and has a minority stake in Vivendi Universal's SFR operation, said the average cost of roaming in Europe will fall from over 0.90 euros to 0.55 euros per minute and benefit its 30 million clients that use roaming.
The new fees are due to take effect in April 2007.
The new tariffs will also affect Vodafone's wholesale arrangements, or the fees it charges rival companies to connect calls via Vodafone's networks.
The U.K. group said it wouldn't strike any agreements including wholesale charges of more than 0.45 euros per minute from October 2006.
The offer would reduce the average wholesale rate from more than 0.70 euros, Vodafone said.
Vodafone already has a roaming program called Passport in place. Launched last year, it allows customers to take their home tariff abroad with an additional per call fee. Vodafone said the service provides savings of at least 30% for more than six million customers.
(END) Dow Jones Newswires"
Posted to the site on 8th May 2006