Telefonica hikes tariffs to counter slow growth

27 Aug 2008

Telefonica is raising its tariffs and scaling back promotions in its key Spanish market in order to counter a drop in consumer spending amid a slowdown in Spain's economy, a Dow Jones report said.

In July, Telefonica began charging fixed line subscribers €0.50 ($0.73) per month for caller ID, a company spokesman said. Before the change, the company offered the service free of charge.

Earlier this month, Telefonica said some of its promotions would stop counting toward the €9 ($13.2) minimum monthly expenditure the company levies on mobile customers.

Telefonica is also charging €1 ($1.46) more per month on some of its high speed internet plans.

The Spanish consumer association Facua filed a complaint to the Spanish government questioning the legality of the caller ID charge, the Dow Jones report said..

A Facua spokesman said the increase already affects 2 million customers, and will affect another 6 million in October. The caller ID charge could boost Telefonica's revenue by €48 million euros ($70.4 million) a year.

In spite of stronger growth in Latin American and European markets, in Spain Telefonica is facing nearly stagnant revenue growth. In the second quarter of 2008, Telefonica Spain's revenue rose 0.8% to €5.2 billion euros ($7.6 billion), the Dow Jones report further said.

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