"Penalties are going to keep going up until we get the signal to corporate Australia that breaching the Australian consumer law matters," Australian Competition and Consumer Commission chief Rod Sims said on Thursday.

"If we find behaviour like this from other telecommunications companies we will come down very hard on them."

He flagged that the watchdog is looking into other price gouging matters.

The penalty imposed by the Federal Court on Thursday is the second largest under Australian consumer law.

Telstra copped the massive fine for exploiting vulnerable Indigenous customers by signing them to mobile phone contracts they did not understand and could not afford.

Many of the Indigenous people signed up did not speak English as their first language and had limited financial and literacy skills to understand the contracts.

Telstra admitted engaging in unconscionable conduct last year.

"This was indeed unconscionable conduct," Mr Sims said.

The listed company took "way too long" to deal with the problem when it was brought to their attention by financial counsellors, he said.

But he accepts the company's contrition is genuine.

Affected consumers will get compensation from Telstra, Mr Sims said.

Australian Associated Press