Professional Documents
Culture Documents
Competitive Structure and Pricing in Telecom
Competitive Structure and Pricing in Telecom
Competitive Structure and Pricing in Telecom
Roadmap
Price Discrimination
Future Outlook
Demand Analysis
The majority of the Indian population is in the age group
of 15-54 in India.
Market Penetration
Company
Bharti Airtel
22.87
Vodafone
18.57
Idea
15.19
Reliance
11.90
TOTAL
Market
Share(%)
68.53
Si2
Bharti Airtel
22.87
523.04
Vodafone
18.57
344.84
Idea Cellular
15.19
230.74
Reliance
11.90
141.61
BSNL
9.78
95.65
Aircel
7.99
63.84
Tata
6.87
47.20
Telewings
4.30
18.49
Sistema
1.00
1.00
Videocon
0.61
0.37
MTNL
0.37
0.14
Loop
0.31
0.10
Quadrant
0.25
0.06
TOTAL
Concentration Levels
Level
Concentration
Ratio
Herfindahl
Index
High
1467.07
9
Spectrum
Share (Si)
Si2
17.19
295.53
9.16
83.85
BSNL
25.89
670.49
HFCL
0.24
0.06
Idea Cellular
8.96
80.21
Loop Mobile
0.35
0.12
MTNL
Reliance
Communications Ltd
2.85
8.15
9.48
89.81
S Tel **
Sistema Shyam
Teleservices
0.53
0.28
1.39
1.92
7.10
50.38
Telewings (uninor)
1.53
2.33
Videocon Telecom
1.06
1.11
11.51
132.42
2.77
7.69
Vodafone
Aircel Ltd
Reliance Jio
TOTAL
1424.37
COMPETITIVE STRUCTURE
11
12
Why Interdependence?
Pricing
Policy making
Advertising
13
Network Externalities
15
Homogeneous or Differentiated
Product?
Homogeneous
Oligopoly
Differentiated
Telecom:
Companies offer similar service - network for
wireless communication, internet services,
etc.
Does Competitive outcome in telecom
industry occur with Price?
Is telecom industry a Bertrand Competition
market?
16
Bertrand Competition
Companies compete each other over prices rather than
quantity
17
Entry barriers:-
Non-Price Competition
The competition in an oligopoly is not just restricted to price,
but other aspects that impact a consumers buying decision
Non-Price Competition
20
Non-Price Competition
Airtel has always endorsed popular figures with its brand to attract
masses
Vodafone has never endorsed celebrities to the brand and has
created animated characters called ZooZoos
Idea tries to give out a social message through its campaigns.
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PRICING STRATEGY
22
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Evolution of Pricing
Introduction Phase (1995-2000)
Growth Phase (2001 - 2005)
Maturity Phase (2005 - 2009)
Price Wars (2009 2012)
Tariff hikes since 2013
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25
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Price Discrimination
Charging different prices to different customers
First degree higher prices during peak hours, reduced
night calling rates
28
Price Parallelism
Widely prevalent in the industry
Price-fixing between competitors that occurs without any
actual agreement
29
Tacit Collusion
With no formal agreement, major players collude to raise
prices
30
Termination Charges
3 models of charging exist:1. Calling Party Pays (CPP) Currently existing in India
2. Bill and Keep(BAK) aka peering
3. Receiving Party Pays (RPP) rarely used
32
CONTESTABILITY FACTORS
33
Tower Sharing
expenditure
2. Expansion into rural markets - Reducing capital expenditure
3. Reduction in entry barriers for new entrants
E.g. Indus Towers, Jointly owned by Airtel, Vodafone and Idea
34
Spectrum Sharing
35
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FUTURE OUTLOOK
37
National Telecom Policy (NTP) has targeted 100% teledensity and 600 million broadband connections by 2020
38
Opportunities
New technologies like 3G and 4G
Mobile value added services like mobile banking, mobile
retailing etc.
THANK YOU
40