Indian mobile market economics, Indian mobile market analysis, types of market, chronology of telecom industry in India, Oligopoly, duopoly market

2. Changing Indian
Mobile Operator
Market
INDIAN ECONOMY
2016 2017
GDP (current US$) (millions) 2,274,229.7 2,600,818.2
GDP growth (annual %) 7.1 6.7
Mobile cellular subscriptions (per 100 people) 85.2 87.3
Created from: World Development Indicators
• India has the 2nd largest telecom
network in the world.
• Total Mobile subscriber base in the
country stood at 1,171.76mn at the
end of Nov’2018
• Telecom sector contributes 6.5% to
the national GDP.
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

3. Indian Telecom
Department formed
MTNL & BSNL (PSU)
organization’s
National Telecom Policy
formed. First Cellular
operation
New National
Telecom Policy
formed
Unified Access
Service
NTP, Unified License
Regime, MNP
Era of M &A
1985
1986…
…1990
1995…
...1990
1999…
...1996
2007…
…2003
2014…...
......2009
2018………
……..2016
Bharti, Essar, Hutchison
Max, BPL,Modi Telstra,
Usha Martin, Skycell and
RPG
CDMA (Tata, Reliance,
MTS), GSM (Bharti,HFCL,
Shyam Tele)
Monopolistic market for
metros Delhi & Mumbai,
Highly regulated
Limited FDI 49%. 8 operators
given license (2 per circle) -
Duopoly market
FDI raised to 74%. New private Operators
given license. Genesis of Highly competitive
market. Entry for private players.
CDMA network launched.
More new & existing GSM
players
Japan(DOCOMO),Russia (MTS), Norway (TELENOR),
UAE (ETISALAT), VODAFONE invested in India 2009
but license of many cancelled due to political SCAM.
Almost 15 mobile operators, Intense Competition
Entry of new Operator (JIO) predatory pricing, Big
players acquired small players, dropping revenue,
Cartel & Collusion market, Oligopoly trend
3 big players-Airtel,
VODA-IDEA, JIO
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

4. Airtel, 33.32%
Vodafone,
21.06%
IDEA, 20.00%
Rjio, 25.62%
% market share (Subscribers) as of November 2012
Airtel
21%
Aircel
7%
Vodafone
17%
Reliance
15%
Idea
13%
BSNL
11%
Tata
8%
Uninor
5%
MTS
2%
MTNL
1%
Videocon
0%
Loop
0%
HFCL
0%
% market share (Subscribers) as of November 2018
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

5. Risk Involved in
Oligopoly Market
• Barriers to Entry
• High Opex and Capex
• Identical Models
• Price and Volume
competition
• High Competition
• Interdependency
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

6. Oligopoly
Market
Determination
Concentration Test:
• Key indicators are sales revenue and
industry revenue in market share
(Individual sales/Total Sales)
• Takes into account Top 2,3 or 4 players in
the market
• Concentration ration of top 2 at 74.38%
Herfindahl-Hirschman Index:
• Squares the market share
• Sum of squares ranging between 0-
10,000
• Moderate concentration between 1500-
2000 conclude market is “Oligopoly”
• Increase of HHI by 200 points can lead to
anti-competitive behavior in market in a
highly competitive market.
Example: Reliance Jio’s free voice call
with data services in the market.
Predatory pricing model used.
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

7. Conclusion
• Telecom market plays a significant role in economy
• Markets structure change with entry of new entrants and policies
• Pricing is the most critical factor in competitive market
• Collusion market
 Tacit collusion
 Rival firms joined together to exclude new firm
 Vertical price fixing between mobile operator & retailer
 Higher prices for consumer
• Cartel market
 Cartel-like’ behaviour, even though there is no formal cartel
 Manipulate pricing
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz

8. References
• https://main.trai.gov.in/release-publication/reports/telecom-subscriptions-reports
• Sharma, G. (no date) ‘Stability and Competition in the Indian Telecom Sector
Analysing the anamolous behavior of Jio’, p. 23
• A_TwentyYear_Odyssey_1997_2017.pdf’ (no date). Available at:
https://main.trai.gov.in/sites/default/files/A_TwentyYear_Odyssey_1997_2017.pdf
Ashish V Singh | Bharadwaj Ramesh | Patricia Queiroz