Mobile firms' VAT climbdown

A U-TURN by Orange and SFR over passing on VAT rises to customers has been heralded as a "excellent news for consumers".

The threat of mass contract cancellations has prompted the firms to absorb the cost of the tax rise.

By putting up their prices, the firms opened up the opportunities for clients to cancel their contracts and switch to other operators, keeping their phone number and without suffering cancellation fees.

As a result, cancellations at SFR rose from 7,500 per month to 17,000 following the announcement of the price rise according to ZDNet. Consumer group UFC Que Choisir saw 500,000 cancellation helpkits downloaded from its website in January.

A government spokesman said the U-turn was excellent news for consumers.

The other main mobile firm, Bouygues, had already announced it would not be putting up its prices.

The mobile climbdown does not affect price rises on internet, telephone and television triple-deals, which have also risen in price after the VAT rate change.