Once again, the Indian telecom sector appears to be gearing up for another round of tariff hikes as per a latest report by IIFL Capital.
Telecom Industry Expecting A Tariff Hike
Not only that it is likely to exceed by 15 percent, by late 2025.
Further, this report highlighted that the entry-level plans may remain insulated from these increases while reflecting a strategic focus on affordability for low-income users.
This move is crucial for the industry’s financial stability, particularly for Vodafone Idea (Vi) as the telecom continues to struggle to position itself as a viable third player in the market, as per the report.
Further mentioning “that there is likely to be another round of 15 percent + tariff hikes in late 2025. However, we will not be surprised if entry level plans see no tariff hikes.”
Moving ahead, the recent developments highlight the challenges faced by the industry in balancing revenue growth and customer retention, said the report.
The earlier tariff hikes which were implemented in July 2024 led to notable SIM consolidation and down-trading.
It would definitely help the telecoms such as Jio and Vi as they are experiencing lower-than-expected revenue gains.
Besides this weak consumption spending across other economic sectors has dampened consumer spending power.
Notable Price Hike In Mid- to High-tier Plans
This would also impact the industry’s revenue potential.
In addition to these dynamics, the regulatory stance of the Telecom Regulatory Authority of India (TRAI) also mandated the introduction of voice-and-SMS-only packs without bundled data recently.
Moving ahead, this directive aims to ensure affordability for customers for those who do not require data services.
Highlighting the TRAI’s concerns about unchecked tariff increases, particularly for entry-level users.
The tariff hikes remain inevitable, driven by the need to ensure Vi’s financial health and sustain its competitiveness despite the challenges as mentioned in the report.
These relief measures seem to have been introduced to support Vi only.
This partially addresses its financial challenges, leaving a significant revenue gap to be filled through higher tariffs.
“In our view, we do not see any risk to future tariff hikes since the relief measures only partly address the challenge of making Vi a competitive third player,” the report added.
They are planning to make notable price increases for mid- to high-tier plans and may see notable price increases.
At the same time the entry-level plans could remain unaffected to avoid alienating budget-conscious users and triggering further SIM consolidation.
The telecom industry is moving toward these expected changes and its focus will be on striking a balance between achieving financial sustainability and maintaining consumer affordability, ensuring the long-term viability of the sector.
