India has the lowest tariff rates for telecom services out of comparable economies whose gross national income per capita (GNIpc) is lower than $10,000, ICICI Securities said in a report on Friday.
Telecom tariffs make up for 1.11 per cent of India’s GNIpc, which is only second to Brazil’s 0.94 per cent, however, the country’s GNIpc is 3.4 times that of India, making tariff rates there overall more expensive than in India’s lower per capita income economy, the report said.
India’s tariff in absolute terms is the lowest at just $2 compared to an average rate of $4. Developed economies such as the US have telecom tariff at 0.74 per cent of GNIpc, and absolute telecom services tariff plan at $43.6.
“Considering telecom spend is a necessity, it indicates that higher the per capita income, lower will be the tariff for telecom services as per cent of per capita,” as per the report.
Despite telecom tariff rates in the country growing two-fold since July 2017, India’s telecom services are most affordable globally, and Indian consumers enjoy the highest ‘consumer surplus’ due to increased data subscriber adoption and growing data consumption.
Additionally, digital adoption in India, especially for services like payments and entertainment, has been relatively high, indicating that the functional value of telecom services has shifted from being mere communication solutions to multipurpose utility services, the report said.
The report stated these factors can allow telecom operators in India to further hike tariffs by 1.5x in the next 4-5 years due to their higher importance in daily functionality and high consumer surplus, provided that there is reasonable competitive intensity in the sector and minimum data requirement continues to grow.
“Yet, India will retain being the most affordable telecom services tariff market. Indian telecom tariffs (on a comparable basis) for unlimited data plans should be even more attractive,” the report concluded.
Published 29 December 2023, 20:56 IST