Impact of Increasing Competition in Indian Telecom Sector

8/8/2019 Impact of Increasing Competition in Indian Telecom Sector

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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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THANKYOU

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Impact of Increasing Competition in Indian Telecom Sector