Trends in telecommunications prices - May 2021

Executive summary

Prices increased by 1.1% in May 2021

In May 2021, telecommunications prices, as measured through the Consumer Price Index (CPI) the sub-index, increased by 1.1% from the previous month due to price increases of some bundled offers.

Compared with the same month of the previous year, the change in prices was 0.4%. The year-on-year change in telecommunication prices has been lower than the growth of the CPI since November 2017. The average rate of change in telecommunications prices over the last twelve months was -0.8%, which is 1.0 percentage point (p.p.) lower than that recorded by the CPI (0.2%). This price reduction reflects the lower monthly fees of some post-paid mobile broadband offers via PC/tablet and some bundled offers.

Average change over the last 12 months in Portugal was 0.7 p.p. lower than in the EU

In May 2021, the average rate of change in telecommunications prices in Portugal was lower than in the European Union (-0.7 p.p.). The average rate of change over the past 12 months in telecommunications prices in Portugal was the 11th lowest (17th highest) among the EU countries. The country where the biggest price increase occurred was Poland (+5.8%) while the biggest decrease was in Luxembourg (-3.8%). On average, telecommunications prices in the EU decreased by 0.1%.

Prices have increased by 10.1% since the end of 2010

From a long-term perspective and in cumulative terms, telecommunications prices grew by 10.1% since the end of 2010 while the CPI grew by 10.7%. The divergence between the evolution of the two indices began in 2015 and became more pronounced in 2016, and is associated with the "price adjustments" made by the main providers. As of May 2019, the decrease in the divergence between the two indices was mainly due to the entry into force of Regulation (EU) 2018/1971 of the European Parliament and of the Council which imposed a maximum price for international intra-EU calls and SMS.

If the price of intra-EU calls had not been reduced, it is estimated that telecommunications prices would have grown by 13.7% since the end of 2010, being, in cumulative terms, 3.1 p.p. above the CPI variation in this period.

Since the end of 2009, prices in Portugal increased by 8.1% while in the EU they decreased by 9.7%

Between the end of 2009 and May 2021, telecommunications prices in Portugal increased by 8.1%, while in the EU they decreased by 9.7%. The gap has narrowed with the entry into force on 15 May 2019 of new European rules regulating intra-EU communications prices.

A more refined comparative analysis with some Eastern European countries shows that between the end of 2009 and May 2021 telecommunication prices decreased by 13.3 in Bulgaria, while in Hungary, Portugal and Romania they increased by 2.2%, 8.1% and 18.6%, respectively.

NOWO presents the lowest monthly fee for eight services/offers

NOWO offered the lowest monthly fees in eight cases out of a range of 13 services/offers, while MEO, Vodafone and NOS had the lowest monthly fees for three, two and one type of services/offers, respectively.

Compared to the same month last year, there were 25 changes in minimum monthly fees for services/offers, of which 21 were price increases and four were decreases.

The following price variations are noteworthy: the minimum monthly fee of the 4P offers decreased 1.1% (due to the 50% reduction in the monthly fee of NOWO's offer with box in the first 6 months); the minimum monthly fee of Mobile Broadband via PC/Tablet increased 4.3%, following the elimination of the offer of the first monthly fee of MEO's base service; the minimum monthly fees for STV and STV+FTS increased by 30.8% and 77.6% as a result of the end of the commercialisation of an offer by NOS; and the minimum monthly fee for individualised fixed broadband (FBB) increased by 4.3%, due to the end of the first monthly fee offer by NOWO.

Per provider, MEO decreased the minimum monthly fee of one service/offer compared to the same month of the previous year and increased the monthly fee in eight services/offers. The MEO service whose monthly fee decreased significantly was the offer of mobile phone service with Internet on the mobile phone (UZO offer), which now presents values close to the minimum monthly fee (provided by NOWO). NOS increased the minimum monthly fees for eight services/offers and decreased the monthly fee for one offer (mobile phone service with Internet on the mobile phone - WOO offer). Vodafone increased the minimum monthly fees of four services/offers. Particularly noteworthy was the increase in the monthly fees of the MEO, NOS and Vodafone triple play offer that occurred in October and November 20201 and the quadruple and quintuple play offers of MEO and NOS in May 2021.

According to the ITU, prices in Portugal rank between 6th and 25th in the EU

According to the ITU's ICT price trends, which aims to assess the affordability of electronic communications services, in 2020 the prices charged in Portugal occupied between 6th and 25th positions in the ITU ranking, depending on the type of service.

It should be noted that, for comparison purposes, the ITU used consumption profiles that were relatively small and lower than the national average.

Communications 18.1% above the European average

In absolute terms, and according to EUROSTAT, in 2020, communication prices in Portugal were 18.1% above the European average.

Communications and personal transport are the only products in Portugal whose price level is above the European average.

1 See: MEO, NOS and Vodafone increase monthly charges of 3P bundles by 3.3% and reduce quality