Edition #33: Price Increases & Tariffs: 5 Strategies To Help Telcos Stay Profitable

This year has been a wild one to say the least. Geopolitical tensions, ever-shifting trade policies, and inflationary pressures – it’s a lot, and it feels everything keeps changing by the minute. It’s a downright volatile environment to do business in.

These global shifts are having incredible impacts on retail pricing, supply chain stability, and customer expectations. With no clear end in sight, telcos must not only adapt but evolve.

In this edition of Telco Talk, we will present some actionable strategies telcos can use to weather these economic headwinds while maintaining a strong customer experience.

The Problem: Global Instability Is Putting Economic Pressure on Telcos

Although telcos are generally less affected by tariffs than manufacturers due to their reliance on subscription services, they are still vulnerable to today’s global uncertainty.

Here are three immediate impacts:

1. Tariffs And Trade Disruptions Are Raising Costs

Recent trade policy shifts—particularly rising U.S.-China tensions and new European tariffs on foreign electronics—are squeezing margins across the board. Smartphones and telecom hardware, which often rely on complex international supply chains, are especially vulnerable.

Verizon’s CEO recently warned of potential price increases due to growing economic pressures. "We’re dealing with a world that is less predictable than ever,” said CEO Hans Vestberg. “That means our customers may start to see costs go up in areas that are beyond our control.”

2. Consumers Are Becoming More Price-Sensitive

In this economy, shoppers are hunting for value. High inflation has tightened consumer wallets, and many are questioning whether they need that new flagship phone or premium plan.

According to CivicScience, 46% of US adults canceled or downgraded subscriptions in February to decrease their spending.

Telcos are being pressured to justify pricing, enhance perceived value, and offer promotions that maintain engagement without eroding profits.

3. Unpredictable Prices Have Created Planning Challenges

When device costs fluctuate due to inflation, tariffs, or currency shifts, telcos are forced into a tricky balancing act: raise prices and risk customer churn or absorb the cost and sacrifice profitability. Some carriers, like Verizon, have frozen promotional pricing in an attempt to give their customers some predictability.

Industry experts are advocating that telcos find other ways to retain customers, like doubling down on loyalty programs to offset these pressures (though these too can be susceptible to volatile prices). Others, like Verizon, are implementing promotional freezes and accepting thinner margins—a short-term fix that’s unsustainable in the long run.

The Response: 5 Ways Telcos Can Adapt

Despite these challenges, telcos are not standing still. Many are already rolling out new strategies to reduce exposure and reinforce their retail operations. Here are five practical and powerful ways telcos can take control in a time of global uncertainty:

1. Use Smart Inventory Management To Control Your Costs

Carrying excess inventory is a cost burden telcos can't afford right now. Unsold devices depreciate quickly and tie up capital. Retailers that implement smart inventory management systems can better forecast demand, reduce overstocking, and pivot promotions to avoid losses.

Modern inventory tools help telcos optimize stock levels and reduce waste, which is crucial when margins are razor thin.

Must-have inventory capabilities include:

• Real-time visibility across channels.
• Serialized stock tracking across all movements.
• Automated replenishment based on sales data.

2. Invest In Tech That Improves Efficiency

While economic headwinds might suggest a need to cut spending, strategic technology investments can actually reduce operating costs.

Digital contracts and integrated platforms are essential solutions that eliminate time-consuming swivels and help streamline the customer experience. Now, telcos are building upon those strategies and adopting AI-powered elements to take this a step further.

In our last edition, The Telco Retail Experience Gets a Makeover: How AI is Leading the Way, we explored how generative AI can be used to help frontline staff quickly look up product information, promotion details, and answer complex questions on the fly.

Verizon’s Senior Manager of Conversational AI, Kevin Velasquez, highlights the goal of incorporating AI into the customer experience, saying, “Our focus is around trying to reduce the mental load on our front-line reps. We want them to do what they do best, which is focus on building meaningful relationships with our customers”.

3. Empower Frontline Staff With Training & Motivation

In times of economic stress, frontline retail staff become even more critical. They're the human face of the brand, and how they handle pricing conversations, frustrated customers, or upgrade opportunities can make or break a sale.

Telcos can reduce churn and increase attachment rates by investing in:

• Sales training that empowers reps to build connections and upsell effectively.
• Gamification and performance dashboards to keep morale and motivation high in challenging conditions.
• Structured growth plans to keep employees engaged, incentivize performance, and reduce turnover.

4. Trim Product Portfolios So They’re Leaner & Smarter

Rather than stocking dozens of device models across price tiers, telcos can shift toward curated product assortments that align with consumer demand and reduce inventory risk. This strategy lowers costs, simplifies logistics, and improves sell-through.

Strategies include:

• Focusing on high-margin hero products that deliver the most return.
• Offering refurbished or certified pre-owned devices—which are gaining popularity in inflationary markets.
• Using analytics to identify which SKUs underperform and phase them out faster.

According to IDC, global shipments of used smartphones are projected to reach 431.1 million units by 2027, up from 283.4 million in 2022—a clear signal that telcos should lean into this trend.

5. Double Down On Omnichannel

Economic uncertainty has only accelerated the need for seamless omnichannel strategies. Customers expect a unified experience—whether they’re browsing online, buying in-store, or engaging via an app.

Retailers that blur the line between online and in-store engagement will not only drive more sales but also gain crucial data insights to optimize operations.

Telcos should invest in a single-front-end commerce platform that can unite your physical and digital channels. Customers should be able to easily start a transaction in one channel and finish it in another.

Key features to look for in a platform include:

• Strong integration capabilities with containerized, modern architecture.
• Broad range of physical and digital solutions.
• Enables a 360-view of the customer and can use data to generate personalized offers.

Wrap Up

Economic uncertainty isn’t going away—but it doesn’t have to derail your business. By embracing cost-saving innovations, improving agility, and rethinking how value is delivered, telcos can maintain their profitability while building trust with increasingly cost-conscious customers.

The winners in this new era won’t just be those who survive the storm, but those who transform through it.