Vodafone has announced plans to cut costs by one billion euros (£880 million) after the mobile network said its adjusted earnings dropped by 2.6 per cent in H1 2022.

The huge cut in costs could mean many job losses, but Vodafone’s chief executive Nick Read did not specify where redundancies would be made.

“In terms of redundancies, of course, when we drive efficiency, product improvements and digitisation, there are impacts on some job roles,” he said.

“But we are also creating jobs in other areas, such as DevOps, tech development and software engineers, which are growing significantly.

“We are growing in a number of areas but obviously there will be efficiencies in other activities.

Tackling current costs

He continued to say that the network will take “pricing action” across Europe despite price changes already being made in 12 out of 13 European markets which have included a rise in contract prices.

Read added: “I think we need to take a step back because our industry has faced a decade of deflation, and we are facing significant negative impacts on inflation and energy.

“So price is a key component of what we have to do, like every other sector that is making price increases. We are talking £1 or £2 a month on the typical bill.

“If you draw a comparison to mortgages or filling a tank of fuel for a car, I would say for what we offer, we are giving tremendous value.”

Vodafone has also implemented a cost-of-living plan for its customers, including social and low-cost tariffs, and extra support measures for consumers and businesses.

SMARTY mobile is offering customers an extra 20GB of data every month for a whole year on its 30GB for £10 SIM-only plan.

The monthly rolling plan involves unlimited calls and texts, EU roaming with 12GB of data, 5G and no annual price rises.

SMARTY says switching from a pay monthly plan to SIM only can save money amid the cost of living crisis and its new deal means you get 50GB of data per month for just £10.

Its 30-day rolling plan offers flexibility and customers won’t be faced with annual price increases during the contract.

Six million households are struggling to afford telecom services such as broadband, landline and mobile phone packages according to analysis from Which?

Its analysis of Ofcom survey data found around 5.7 million households experienced financial issues regarding telecom services in April 2022- including cancelling their service, switching to other packages or missing payments.

Households experiencing affordability issues increased from 16 per cent in February to 20 pc in April this year,  and those facing multiple telecom affordability issues grew by 56 pc from February to April this year. 

The survey found 3.5 million households in April had reduced their spending on other essentials to afford connectivity- up from 2.2 million households in February. 

Action needed

Which? Are calling on the government to cut down VAT paid on telecom services to ensure it is more affordable for everyone- as broadband, mobile and landline have now become essential.

Research reveals that reduction in VAT could save people on a standard broadband tariff up to £57 a year and £37.50 a year on a social tariff.

The company also believes consumers should be made aware of the best value deal or any discounts if they are eligible, and should provide support for those struggling.

Which? Director of policy and advocacy Rocio Concha said: “The fact that millions of households have made sacrifices to prioritise their broadband and mobile connections during the cost of living crisis demonstrates just how essential these services are for day-to-day modern life. 

“To help cut bill costs, the next Prime Minister should reduce the VAT paid on telecoms to five per cent in line with other essential services. 

“Businesses must support anyone struggling to afford their bills and ensure consumers are aware of and able to access the best deals.”

Virgin Media O2 is giving away an extra 15 million GB of free data to the National Databank, meaning those most affected by the cost of living crisis are entitled to 20GB of free O2 mobile data per month.

This is an increase from 15GB data per month, and this data boost can provide someone with the ability to browse for around 220 hours, download around 340 songs and watch 800 minutes of tv.

The data pledge surpasses Virgin Media O2’s original commitment to the National Databank and now more than 61 million GB of data is being donated to the initiative by the end of 2025.

Since the launch of The National Databank a year ago, more than 50,000 SIM cards and 10,000 O2 vouchers have been released.

Working together

Virgin Media O2 CEO Lutz Schüler said: “We know how important it is for people most affected by the rise in the cost of living to have access to free mobile data so they can get online and stay in touch with loved ones, and access essential services, from virtual medical appointments, to job interviews and training.

“That’s why Virgin Media O2 is providing extra help for people in need by donating even more free data to the Good Things Foundation and the National Databank to ensure people can stay connected during the difficult months ahead.”

Good Things Foundation group chief executive Helen Milner OBE added: “Having enough data in our increasingly digital society is not just a nice to have, it’s an absolute essential.

“There are 2 million households struggling to afford internet access in the UK today, and 10 million adults lack the most basic digital skills.

“Together, we can help address the issue of data poverty in the UK once and for all.”

The UK’s largest broadband and mobile operators have agreed to new commitments to support customers through the cost of living crisis following a meeting with members of the government.

Those from the UK telecoms market who signed up to the pledges include BT Group, Openreach, Virgin Media O2, Vodafone, Three, TalkTalk, Sky and Community Fibre.

The commitments posted on the gov.uk website are:

• All providers commit to supporting their customers who may be struggling with the cost-of-living and to treat them with compassion, understanding and as individuals.
• All providers commit to supporting customers struggling with their bills and to offer ways to keep them connected, such as allowing them to move to cheaper packages without charge or penalty, or agreeing manageable payment plans.
• All operators commit to continue to protect the connectivity of their customers known to be vulnerable as a priority.
• Providers – supported by Government – commit to take steps to raise awareness of low cost products to those claiming Universal Credit.
• Mobile providers commit to considering more ways to help their customers, including exploring tariffs, options to improve existing low cost offers, and increasing promotion of existing deals.

The meeting, chaired by Digital Secretary Nadine Dorries and Cost of Living Business Tsar David Butress, outlined that anyone struggling to pay for their broadband or mobile bill due to global price rises can seek support from their provider.

Digital Secretary Nadine Dorries said: “Families across the country face increased anxiety about keeping up with bills, so today I agreed with broadband and mobile industry bosses what more can be done to support people during this difficult time.

“I’m pleased to report the industry is listening and has signed up to new commitments offering customers struggling with the cost of living help to stay connected. Those who need support should contact their supplier to see what is available.”

The Digital Secretary has also been asking all providers to offer social tariffs for their customers- which means customers on Universal Credit and other benefits can receive discounted broadband and mobile deals. 

Support from the industry

Community Fibre CEO Graeme Oxby, who was present at the meeting, said: “We continue to work closely with our social housing partners to identify the households that may need free internet connections most. 

“Our team of digital ambassadors are on hand to provide digital skills training within the communities we serve.”

Community Fibre claims to be the only provider that doesn’t ask people to prove eligibility when they apply for a social tariff.

Its customers can save up to £594 on social broadband tariffs and its essential package only costs £12.50- which the provider also claims is the most affordable on the market.

Commenting on the new commitments, KPMG head of TMT Ian West added: “Unfortunately, the cost of living crisis isn’t going anywhere, so it will be interesting to see how telcos adjust their business models to accommodate the changes announced yesterday. 

“For most telcos their margins are already tight and they face a tricky balancing act in the months ahead with finding innovative new ways to serve their customers in a more cost effective manner whilst also pleasing their shareholders.”