• While utility prices have risen, reflecting broader inflationary pressures, telecom remains a rare deflationary sector.
• From being the goldmines of the late 1990s today’s telecoms sector is a much more uncertain investment.
• As the industry looks to the future, finding a balance between affordable services for users and the financial health needed to support ongoing modernisation will be crucial.

Telecoms services are no longer a matter of convenience or progress – they are vital. The global economy is now driven by digital transactions, remote collaboration, and real-time communication, all of which rely on secure and reliable networks.

But the role of telecommunications extends beyond commerce. In healthcare, digital networks make possible everything from electronic patient records to telemedicine, allowing doctors to consult with patients hundreds of miles away.

In education, online platforms bridge geographic divides, giving students access to resources and teachers they might never otherwise encounter. For governments, telecom networks provide the infrastructure for emergency services, public safety alerts, and civic administration.

Just as clean water protects public health, and electricity powers hospitals and schools, telecommunications sustain the systems that keep societies informed, safe, and cohesive.

Connectivity has become as essential to well-being as any other utility. Social ties increasingly depend on digital platforms, particularly for those separated by distance.

For many, access to the internet determines whether they can apply for a job, access social services, or even participate in democratic processes.

The pandemic underscored this reality: when offices, schools, and even social gatherings moved online, those without reliable connectivity faced exclusion and hardship. In the twenty-first century, to be disconnected is to be disadvantaged in ways that echo the struggles of communities without electricity or running water in earlier eras.

So, falling telecoms prices is good news – right? 

At first glance, falling telecoms prices may seem like an unequivocal win for consumers. But for telecoms businesses, it’s a concerning trend.

Worrying numbers

Italy provides a picture of the situation in many parts of the world. According to the country’s communications authority, AGCOM, telecom services in Italy are now 30 per cent cheaper than they were a decade ago.

In France, prices are down 26.1 per cent over the same period. Across the European Union (EU27), the average decline is 9.7 per cent. 

As the value of telecom services—when adjusted for inflation—has effectively been halved, operators are left grappling with a critical question: How can they fund the ongoing modernisation of networks and services when revenues are shrinking?

The need for investment in 5G, fibre, and next-generation infrastructure is greater than ever, yet the price users pay for these services continues to fall.

The AGCOM survey’s international benchmark underscores this paradox: Italy leads Europe in telecom affordability, but the sustainability of this model is now in question. As the industry looks to the future, finding a balance between affordable services for users and the financial health needed to support ongoing modernisation will be crucial.

Telecoms lag behind energy, water and waste

The situation is even more striking in Italy when compared to other utilities—such as energy, water, and waste—which have all outperformed communications in terms of price trends.

While utility prices have risen, reflecting broader inflationary pressures, telecom remains a rare deflationary sector. This dynamic benefits consumers in the short term but puts increasing pressure on operators’ ability to invest and innovate.

Utilities such as gas and power have experienced dramatic price hikes. 

In Italy, over the past four years, gas prices soared by 76.0 per cent, and power prices jumped by 64.5 per cent. Water and waste services also saw increases of 19.0 per cent and 7.3 per cent, respectively.

Even urban transport and trains, while more stable, still posted modest increases. By contrast, the price index for communications services fell by 10.9 per cent in the same period.

According to AGCOM’s data, while the general price index in Italy has risen by 18.1 per cent over the last four years, the price index for communications services (including postal services, fixed and mobile telephony, pay TV, and related items) has decreased by 10.9 per cent.

The AGCOM summary price index (ISA), which tracks a basket of ten communication-related items, dropped by 6.6 per cent over four years and three per cent year-on-year. In contrast, regulated services at the local and national levels increased by 9.7 per cent and 3.4 per cent, respectively.

Profitability and pressure

The profitability statistics for the telecom sector seem to show reason for concerns. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) margins have reduced significantly, and investors no longer treat telecoms as a safe, steadily yielding sector.

New opportunities—IoT services, digital platforms, even fintech integrations—remain exciting but marginal against the colossal weight of connectivity revenues. The price of “the pipe” is consistently falling even as demand for capacity grows. 

Telecoms companies have generally been incredibly resilient with margins and cash-flow discipline, as well as headcount savings. However, the progressive ARPU (Average Revenue Per Unit) erosion is having a serious impact on some. 

According to a 2025 report from BCG, telcos face an increasing challenge to cover their cost of capital. The study shows median ROIC (Return On Employed Capital) of around 7–8 per cent in recent years, dipping to about 6.7 per cent in 2024, while sector WACC (Weighted Average Cost of Capital) rose to about 7.1 per cent. 

So, telecoms on average were making less than 7 per cent returns but the cost of investing money was higher at over 7 per cent on average making this a leaky bucket.  Given the size of the debt for the telco sectors, that is a worrying trend. 

Looking at averages can be misleading, but there are surely some telcos out there that are earning at a lower rate than they are borrowing money. In other words, far from being the goldmines of the late 1990s, today telecoms is a much more uncertain investment.   

• Dario Betti is CEO of MEF (Mobile Ecosystem Forum) a global trade body established in 2000 and headquartered in the UK with members across the world. As the voice of the mobile ecosystem, it focuses on cross-industry best practices, anti-fraud and monetisation. The Forum, which celebrates its 25^th anniversary in 2025, provides its members with global and cross-sector platforms for networking, collaboration and advancing industry solutions.