Telstra may bring back handset subsidies

Telstra says it may reintroduce subsidies for some mobile phone handsets due to ongoing competitive pressure from rival Singtel Optus. Telstra abolished the costly handset subsidies in January, while Optus has reduced some subsidies but still offers consumers free or reduced price handsets and is likely to continue with this strategy for some time.

There are about 11 million mobile phone subscribers in Australia, with Telstra having about 45 per cent of these currently, though Optus, with around 33 per cent, is gaining steadily. Telstra spokesman David Thodey says that the telco wants to maintain its market share and achieve high-single or double-digit growth in line with the industry.

An increasing number of carriers worldwide have phased out handset subsidies which help to boost sales – with offers of “free” phones – but increase the costs of sales significantly.
Telstra also says it may reintroduce limited subsidies in order to promote new technologies, although it won't push forward with a 3G mobile network until there is sufficient consumer demand for high-speed data products to justify the investment.