‘It’s like paying off someone else’s mortgage’: Vodafone slams Telstra, Optus over phone leasing

TELSTRA and Optus have defended a mobile phone scheme which one competitor has slammed as a massive “rip-off”.

Is phone leasing a rip-off? Picture: Jung Yeon-Je/AFP

IF YOU’RE looking to save $10 off your monthly mobile phone bill, a leasing plan with Telstra or Optus might seem like good value.

Unlike typical phone plans which let you keep the handset at the end of the contract period, under a phone lease you pay less, but don’t own the phone.

At the end of the 24-month contract, over which you will have saved about $240, you can then either hand the phone back to your telco or buy it outright for an “agreed market price”.

But while both Telstra and Optus have introduced phone leasing in the past year — Telstra under its Go Mobile Swap plan and Optus with its My Plan Flex scheme — Vodafone has slammed its bigger competitors, accusing them of ripping off consumers.

“In all my time, I can honestly say I’ve never seen a product that is more of a rip-off than leasing,” Ben McIntosh, consumer business unit director at Vodafone, said in a speech earlier this month.

“The only party that benefits from phone leasing is the telco offering it. Leasing is like paying off someone else’s mortgage, but never owning the house.”

Critics of phone leasing point out that the telcos make profit off the device over 24 months, then get to sell it again for another $400-plus. At its annual results this month, Telstra revealed it had already made $63 million from phone leasing.

And while it may work out cheaper — according to comparison website Finder.com.au you can save $144 over a 24-month contract for a 64GB Samsung Galaxy S8+ on an $81-a-month Optus plan, and $240 for the same phone with Telstra on an $87-a-month plan — both telcos charge steep penalty fees if anything happens to the phone.

“If you do damage your phone, the amount you’ll pay depends on the precise nature of the damage,” writes Finder’s Alex Kidman.

With Optus, “easy fix” problems will incur a charge of at least $229, and more serious damage will cost you up to $499. Telstra similarly charges $229 for a cracked screen and $499 for a completely broken phone, plus charges of “up to $499” for any other repairs.

In other words, expect to pay through the nose if you drop, scratch or crack your phone at any point during the two-year contract period.

Mr McIntosh told news.com.au leasing was “not something Vodafone has any plans to introduce”. “We believe in customer friendly, transparent and flexible solutions where the customer owns the device they’re paying for,” he said.

A Telstra spokesman said the telco offered customers the choice of “BYO plans”, under which customers can purchase a device and pay it off over 24 months, as well as leasing plans. “Customers can choose the plan that works best for them,” he said.

“We also give customers taking up a BYO plan the option to purchase a new eligible handset and pay it off over 12 or 24 interest-free monthly payments with a Device Payment Contract.

“We’ve found that leasing is very popular with customers who can swap to the latest smartphone more often — and depending on the plan and the handset combination they choose can pay up to $10 less per month than our regular handset plans.

“Many also appreciate the environmental aspect of having their phone recycled at the end of their lease period when they take up a new phone.”

An Optus spokeswoman said the telco introduced its leasing option “based on customer feedback that showed a number of our customers were looking to upgrade, without the upfront cost of buying outright, more frequently than the 24 month contract allowed”.

“Leasing plans like My Plan Flex mean that at the end of their plan, customers are able to trade in their device for the latest model, instead of waiting for another 12 months to upgrade,” she said. “Customers on the My Plan Flex product have been pleased with the service to date.”

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