TalkTalk raises broadband prices up to 43pc as it focuses on mobile growth

TalkTalk has increased the cost of its basic broadband package by 43pc alongside a renewed push in the mobile market as it aims to build strength in the nascent ‘quad-play’ market.

The budget provider increased all its broadband packages by £1.50 per month. For the lowest ‘Essentials’ tier it means a rise from £3.50 to £5 from June 1.

At the top end, the £1.50 increase represents a hike of 8pc for TalkTalk's broadband and pay-TV customers on the 'Plus TV' package.

TalkTalk, Britain’s fourth-largest broadband provider with 4.2 million customers, said it needed to increase its prices because households watching online videos were placing a heavier load on its network, increasing bandwidth costs. Download volumes have grown by 50pc in the past year, and a £100m investment will be required over the next five years to meet demand, the company added.

TalkTalk’s higher broadband prices will be introduced six months after it followed BT and Sky to announce above-inflation increases in line rental. The company said it remained the cheapest provider in the market and claimed customers saved up to £176 per year compared with BT.

Baroness Harding, TalkTalk’s chief executive, said: “You will still save a considerable amount. We’re always a follower on pricing.”

TalkTalk also responded to BT’s recent re-entry into the mobile market by introducing a new SIM-only package to undercut rivals.

The £12-per-month offer, only available to TalkTalk broadband subscribers, offers unlimited data, and texts on a rolling 30-day contract. Unlike BT’s packages, mobile internet access is 3G only, however.

TalkTalk is due to move to 4G via a new wholesale deal to use the O2 network, replacing it is old contract with Vodafone, but Lady Harding declined to discuss the timing of the upgrade, which requires the company to build its own mobile billing system.

She said the new package reflected TalkTalk’s growing conviction that the UK will become a quad-play market, in which customers buy bundles of broadband, home phone, mobile and pay-TV services.

Some analysts question consumer demand and the rationale for quad-play, in spite of BT’s decision to acquire EE for £12.5bn to accelerate its attack. For instance, they highlight the fact that while broadband and pay-TV accounts tend to be paid from the household budget, mobile bills are typically a personal expense.

But Lady Harding said: “We started in mobile with an entry-level product with limited minutes and data.

“This is the next stage. What we’re introducing now shows a growing confidence that there is a quad-play market in this country.”

At the end of December, TalkTalk had sold mobile service to nearly 400,000 of its broadband customers, just short of 10pc. Lady Harding said the company is planning a major advertising push in the next few weeks to accelerate its quad-play strategy.