Electronic top-up margins in the Irish Republic are to be cut by Vodafone for the second time in two years in a move condemned by independent retailers’ association RGDATA.
The mobile phone giant told retailers that margins on its e-top ups would be reduced from August 1 - but did not reveal by how much, said RGDATA.
The organisation said it had discovered that margins on e-top ups worth €10 and €15 would be cut from 6.5% to 5.5% while those on €20, €25 and €40 top-ups would drop from 10% to 5.5%. Director general Tara Buckley said this would have serious consequences for retailers and with profit of €328m on a turnover of €2.1bn in Ireland, Vodafone’s reduction was unjustified.
“This is a straightforward grab for more profit by a dominant player in the market at the expense of local shopkeepers. Once again Vodafone has taken a unilateral decision with no consultation - neither consumers nor retailers should be treated in such an off-hand manner.”
A Vodafone spokeswoman said the new rates were necessary to “sustain continual growth in the top-up category” and would not change again for at least three years.
She said all distributors had been notified of the change in wholesale rates - 9.5% down to 8.5% and 13% to 8.5% - and would inform retailers of the exact changes to their margins.
With Vodafone promotions driving up sales, even with the reduction retailers stood to increase profits, she added. “We are offering strong margins, but by also introducing cost efficiencies we are in a position to offer customers more value, which includes direct savings of €40m in the last year.
Vodafone will review the UK margins in August next year.