BT decides to cease inflation-linked mid-contract price hikes

BT opens new tab said it would end inflation-linked mid-contract price rises and switch to setting out increases in pounds and pence at the outset, responding to regulator concerns that mobile and broadband companies were confusing consumers.

BT said on Tuesday that starting in early summer it would introduce a pricing model consistent with proposals made by Ofcom last month, moving to implement the changes before they are formally brought in.

Ofcom announced in December it wanted price rises to be written into contracts in pounds and pence at the point of sale, giving consumers more certainty over what they will pay and promoting competition.

The contract terms had received scant attention when inflation was low, but a sharp rise in 2022 to a peak above 11% resulted in consumers facing hikes in bills of around 14% in 2023 from providers including market leader BT.

Ofcom is due to publish its final decision on the matter this spring.

BT said it was taking Ofcom’s proposals “on board” and as such in the coming months, new and re-contracting customers should expect to pay an annual increase which is expected to be 1.50 pounds ($1.90) for mobile users and 3 pounds for broadband.

The group’s announcement comes a day before British telecoms providers are due to announce price increases due from March 31 2024.

Shares in BT traded down 1.5% to 114 pence in midday trading, underperforming Britain’s bluechip index, opens new tab which was down 0.5%. Reuters