Telefonica's New CEO Pallete Makes First Mobile-Data Price Move

  • Under new terms, clients will be charged for extra usage
  • CEO said Telefonica has to start `educating' clients on data

Telefonica SA, the biggest phone carrier in Spain, will raise prices for some customers by changing the terms of their mobile-data plans, in the first major strategy initiative from new Chief Executive Officer Jose Maria Alvarez-Pallete.

Starting May 18, clients in Spain who exceed monthly data allowances will automatically be charged for more. Under current plans, customers who hit the cap can keep going for no extra charge, but at lower speeds. Customers can opt out of the new terms, which would cost a typical user 15 euros ($17) for 1 extra gigabyte of the faster service, and stick with the old price structure.

The price change, aimed at tapping more revenue from Telefonica’s biggest data hogs, comes less than a month after Pallete, previously chief operating officer, was elevated to chairman and CEO. He has said Telefonica needs to start “educating" clients about how much data they consume. With the new plan, customers will be charged incrementally, at a rate of 1.5 euro cents per extra megabyte used.

Pallete has a record of changing pricing schemes. He was the driving force behind the creation of Fusion, the package that includes fixed- and mobile-phone services, Internet and TV. That plan was a factor in Madrid-based Telefonica’s return to revenue growth in the third quarter of 2015 after seven years of declines.

The package was created in earlier in the decade as the carrier battled to retain clients and weather the Spanish economic crisis amid slumping profits. Telefonica has sought to fend off intensifying competition from Orange SA and Vodafone Group Plc in its home market.

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