Telecom Tariffs and Levies: A Balancing Act for Growth

Telecom operators in India are urged to rationalize levies and strategically hike tariffs to benefit from the investments in 5G infrastructure. Despite significant investments by private operators, transitioning 2G users to 4G remains a challenge. Tariff hikes led to substantial subscriber losses, particularly affecting companies like Reliance Jio and Vodafone Idea.

The telecommunications sector in India is facing crucial decisions regarding tariffs and levies, as experts call for changes that would allow operators to profit from recent infrastructure investments. Notably, companies have channeled approximately Rs 70,000 crore into enhancing 5G digital frameworks.

However, a significant hurdle remains—maintaining connectivity for 180 million 2G users while encouraging their shift to 4G. This transition is vital for inclusive growth in the market, according to Prashant Singhal of EY India Markets and Telecom. The leader suggests rationalizing levies and adjusting tariffs, wherein high-usage customers might pay more, while entry-level users maintain current rates.

Despite tariff hikes in July, telecom giants Reliance Jio, Bharti Airtel, and Vodafone Idea encountered setbacks, losing around 2.6 crore users. A report from Morgan Stanley highlights significant fluctuations in consumer bases, emphasizing tactical changes needed to balance the technological push with customer retention strategies.

(With inputs from agencies.)