impact of increasing competition in indian telecom sector
TRANSCRIPT
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Impact of Increasing Competition
in Indian Telecom Sector
Group I1
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Introduction
One of the fastest growing
Telephone subscriber base: 653.92
million
Tele-density: 55.38.
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Circle categorization
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Market Share*
*as of Nov. 2009
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Regulatory Framework
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Four firm concentration Ratio (I4)
Players MarketShare(%)
Bharti Airtel 22.9%
Reliance Communications Ltd 18.0%
Vodafone - Essar 17.5%
BSNL 12.0%
Total 70.4%
I4
No Concentration %0
Total Concentration %100
Low Concentration %- %0 50
ediumConcentration %- %0 80High Concentration %- %80 100
Market is dominated by 4 players
Product differentiation is high
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Herfindahl-Hirschman Index
The HHI is 0.15which is lesserthan the Globalaverage of 0.30-0.50
Competition isintense
ValueImplication1 Absolute monopoly
0 Absolute competition
0 0.5 MonopolisticCompetition0 .5 0.75 Oligopoly
0.75- 1.0 Monopoly
Players MarketShare(%)Square of Marketshare
Aircel Cellular Ltd 5.8 0.0034Bharti Airtel 22.9 0.0526Idea Cellular 10.0 0.0100
BSNL 12.0 0.0144MTNL1 1.0 0.0001Vodafone - Essar 17.5 0.0307BPL Mobile 0.5 0.0000RelianceCommunications Ltd
18.0 0.0323
Sistema ShyamTeleservices
1.0 0.0001
Shyam Telelink 0.5 0.0000HFCL Infotel 0.1 0.0000Tata Teleservices2 10.7 0.0114
Total 100.0 0.1550
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Pricing
Ta rif f Wa rs ( 2 0 0 9 o n w a rd s )
In d ia is cu rre n t ly th e m os t co m p e t it ive
m a rke t in t he world wh ich h a s le d t o
ta riff wa rs .
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Impact of Tariff Wars
Revenue growth has got impactedsignificantly The break even point for new operators
has increased significantly.
Supply constraints comes intopicture. With decline in prices the consumer
base has increased to unsustainablelevels.
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Demand and supply
Pr
ice
Quantity
D2
D2
D1
D1
P3
P2
P1
SS
SS
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Subscriber Boom
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Penetration in Category C Markets
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Impact on Market Share?
Players Market Share (%)Mar-05 Mar 06 Mar-07 Mar-08 Mar-09 Nov-09
Aircel Cellular Ltd 3.1 2.6 3.3 4.1 4.7 5.8
Bharti Airtel 19.3 19.8 22.4 23.7 24.0 22.9
Idea Cellular 8.9 7.5 8.4 9.2 9.9 10.0BSNL 19.4 20.0 18.7 15.6 13.3 12.0
MTNL1 1.9 2.1 1.8 1.4 1.1 1.0
Vodafone - Essar 16.1 15.5 15.9 16.9 17.6 17.5
BPL Mobile 2.2 1.4 0.6 0.5 0.6 0.5
Reliance Communications Ltd 20.5 20.5 17.4 17.5 18.5 18.0Sistema Shyam Teleservices 2.5 2.0 1.6 1.6 1.1 1.0
Shyam Telelink 0.2 0.1 0.1 0.0 0.2 0.5
HFCL Infotel 0.2 0.1 0.1 0.1 0.1 0.1
Tata Teleservices2 5.8 8.6 9.7 9.3 9.0 10.7
Total 100.0 100.0 100.0 100.0 100.0 100.0
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Revenues and ARPUs
Oct-Dec'04
Jan- Mar'05%ChangeQoQ
Jan- Mar'10
Apr-Jun'10
%ChangeQoQ
Revenue 3207.28 3557.03 10.90% 14425.95 15156.84 5.07%
ARPU 400.11 396.41 0.93% 150.23 143.69 -4.35%
Significant decrease in ARPUs across the
years Rate of growth of revenues has flattened over
the years
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References
Department of Telecommunications
Source: AUSPI, COAI,TRAI and CRISIL
www.ibef.org
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