Felix Mobile undercuts Telstra by 50pc as it chases fed-up Aussies

Budget telco Felix Mobile says Aussies don’t have to accept price hikes of up to 11pc from Telstra, opting itself for a digital-first strategy which has allowed for lower costs.

Budget telco Felix Mobile is undercutting Telstra – offering plans 50 per cent cheaper – after the nation’s biggest mobile carrier lifted prices.

Felix, backed by TPG, is aiming to inject much needed competition into Australia’s telco market after Telstra hiked prices by as much as 11 per cent.

It came less than two months after Telstra CEO Vicki Brady abandoned price rises linked to inflation. But analysts expected Telstra would freeze or lower prices because of increased competition from Optus and TPG’s $1.6bn network-sharing deal.

Telstra went further, slashing data allowances on some plans by 25 per cent, underscoring a lack of competitive dynamics in the market. Ms Brady has said Telstra’s mobile growth remains strong.

While good for Telstra’s profit margin and share price the hike was bad for consumers and the Reserve Bank as it battles to rein in inflation, particularly in the services sector.

But Felix CEO Kelly Beater said Australians shouldn’t have to accept price rises above inflation for mobile plans, and many were seeking cheaper alternatives.

Felix has doubled its annual subscriber growth in the past few years, offering customers a low-cost model that is also environmentally friendly. For each month a customer maintains a plan, Felix plants a tree. It has planted two million so far, and Ms Beater said it was on track to plant five million by 2026, highlighting its strong growth trajectory.

“The vast majority of customers are coming from, I guess, Telstra and Optus. People are definitely looking to save money. When we ask them why have they switched across, nine out of 10 times, it’s price and data,” Ms Beater said. “I think Felix has a competitive advantage against some of the incumbents because we have had the ability to start from scratch. We’ve had a blank tech platform; we’ve been able to pick and choose the right technologies that will combine to provide that great customer service, as well as the low-cost model that then can be passed on to our ­customers.”

Telstra CEO Vicki Brady is hiking the cost of mobile phone plans by as much 11pc as she sacks 9 per cent of the telco’s workforce. Picture: John Feder

Felix’s basic 25GB per month plan costs $25, compared with Telstra’s $49 for the same data amount. Its 50GB for $30 plan is also about 50 per cent cheaper with 15GB more data, while its unlimited data plan costs $40 per month. This compares with Telstra charging $350 a month for 165GB of data.

“We are the only mobile provider that has offered an unlimited data plan,” Ms Beater said.

Optus, Australia’s second biggest telco, will lift the price of some mobile plans by about 5 per cent on August 5 — the first hike since July, 2022. Like Telstra, Optus said it raised prices in order to invest in its network.

But, Optus attempted to cushion the blow by offering more data. “Due to the increasing costs to maintain and provide a great network experience, we’ve made the difficult decision to increase the price of some of our mobile plans. To provide more value, we’ll be increasing the included data on these plans,” the telco said.

Asked how Felix can keep costs so low, Ms Beater said it had the benefit of being a digital-first company, allowing it to cut costs.

“The secret sauce is around using technology. So it is, how do I leverage the best and the newest technologies to be able to develop a low cost model that also provides the best possible customer service, and there’s a lot of examples of the technologies that we’re using,” said Ms Beater.

This includes adopting eSIMs, which save on manufacturing, packaging and shipping, as well as using artificial intelligence across its call centres to allow staff to be more efficient.

Telstra has hiked the price of its mobile plans, and also slashed some customers' data allowances.

Telstra has been under pressure to deliver $400m in cost savings by next year as part of its much-hyped T25 strategy. Most of these savings will come from sacking 2800 staff – or about 9 per cent of its workforce.

It is looking to offload potentially hundreds of millions of dollars in investments from the tech-focused venture capital fund it started more than a decade ago, with Telstra Ventures rebranding as Titanium Ventures this month as it cuts links with the telco.

Telstra has also embarked on its own tech transformation, partnering with Indian titan Infosys as it deploys AI across more than half its operations and automates more tasks. Infosys has also partnered with Titanium Ventures.

“In making these price changes, Telstra has balanced cost of living pressures it knows some of its customers are experiencing, with its need to continue to invest to manage technology evolution and continued strong customer demand on its mobile network,” Telstra said last week.

Telstra also has a budget mobile brand, Belong, the base plan of which almost matches Felix, with 25GB for $29 per month. Its next step in data, 40GB, costs $35 per month, followed by 100GB, which costs $40 per month.

Woolworths’s Everyday Mobile – which uses the Telstra network – is also more expensive than Felix, with its base 110GB plan costing $40 per month for non-Everyday Rewards members. Its top 300GB plan cost $60 per month.

Felix – along with TPG’s other budget mobile brands Lebara and Kogan – recorded a 12.6 per cent gain in subscriber growth to 842,000 in the year to December 31. This compared with its postpaid subscribers in its flagship Vodafone brand firming 0.6 per cent to 3.35m.

Felix, Lebara and Kogan accounted for more than half of the 175,000 new customers TPG signed last year. The telco’s overall mobile revenue surged 9.3 per cent to $2.2bn.