According to a report by IIFL Capital, the Indian telecom sector is gearing up for another round of tariff hikes, likely to exceed 15 per cent, by late 2025. The report also highlighted that entry-level plans may remain insulated from these increases, reflecting a strategic focus on affordability for low-income users.
As per the report, this move is crucial for the industry’s financial stability. Meanwhile, the recent developments highlight the challenges faced by the industry in balancing revenue growth and customer retention. The tariff hikes implemented in July 2024 led to notable SIM consolidation and down-trading, with telcos experiencing lower-than-expected revenue gains.
The report mentioned that weak consumption spending across other economic sectors has dampened consumer spending power, further impacting the industry’s revenue potential.
Adding to this dynamic is the regulatory stance of the Telecom Regulatory Authority of India (TRAI), which recently mandated the introduction of voice-and-SMS-only packs without bundled data. This directive aims to ensure affordability for customers who do not require data services, highlighting TRAI’s concerns about unchecked tariff increases, particularly for entry-level users.
The report further noted that despite these challenges, tariff hikes remain inevitable, driven by the need to ensure telco’s financial health and sustain its competitiveness. The relief measures introduced to support telcos only partially address its financial challenges, leaving a significant revenue gap to be filled through higher tariffs.
It predicted that while mid- to high-tier plans may see notable price increases, entry-level plans could remain unaffected to avoid alienating budget-conscious users and triggering further SIM consolidation. As the industry moves toward these expected changes, the focus will be on striking a balance between achieving financial sustainability and maintaining consumer affordability, ensuring the long-term viability of the sector.
