Oligopoly in the Indian Market

8/9/2019 Oligopoly in the Indian Market

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Oligopoly inthe Indian

Cellular

Market

PREPARED BY:PREPARED BY:PREPARED BY:PREPARED BY:

Kanika Jain (14)Pranav Prakash(15)

Abhishek Goel(16)

Astha Anand(25)

Aman Gupta(31)

Deepak Khurana(40)


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INDEXINDEXINDEXINDEX

S.NOS.NOS.NOS.NO PARTICULARSPARTICULARSPARTICULARSPARTICULARS

PAGEPAGEPAGEPAGE

NO.NO.NO.NO.

1 Introduction 2-3

2 Objectives and methodology 4

3 Analysis 5-8

4 Indian telecom in light of Oligopoly 9-10

5 Exclusive assumptions to Oligopoly 11-13

6 Costs that effect the industry 14

7 Idea Cellular 15-17

8 SWOT analysis 18

9 Strategies 19-21

10 Conclusion 22

11 Bibliography 23


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INTRODUCTIONOligopolyOligopolyOligopolyOligopoly is a market structure in which there are only a few sellers (but more than two)

of the homogeneous or differentiated products. The term oligopoly is derived from two

Greek words: oligi means few and polein means to sell. Oligopoly lies in betweenmonopolistic competition and monopoly. Oligopoly is, sometimes, also known as

competition among the few as there are few sellers in the market and every seller

influences and is influenced by the behavior of other firms.

In India, markets for automobiles, telecommunication, cement, steel, aluminum, etc., are

the examples of oligopolistic market. In all these markets, there are few firms for each

particular product.

The Indian Telecom industryIndian Telecom industryIndian Telecom industryIndian Telecom industry is one of the largest in the world, coming second only to

China in terms of total subscriber base. The total number of mobile subscribers has

increased from 6.4 million in 2002 to 944.81 million in 2012 at a compounded annual

growth rate of 87.7% aided by a significant increase in network coverage and a continual

decline in tariffs and handset prices.

The mobile telecom industry in India has seen an astonishing growth in the last decade

and a half. It is one of the fastest growing telecom sectors in the world [BCG INDIA]. The

sector has been given due importance by the government, as it caters to develop a

nation socially and economically. In recent years the industry has undergone some

serious changes and has been supported by significant policy reforms. The countrys

total mobile subscriber base is over 908 million [Telecom regulatory authority of India].

Its phenomenal growth is propelled by drivers such as newer technology like 3G and 4G,

better devices and most importantly change in consumer behavior. The market share is

dominated by a few larger firms. A few smaller firms are also there but larger firms have

a major chunk of the total market share. Over 80% of the market is held by 7 operators.

With this information, it can be deciphered that the nature of economic structure of

mobile telecom industry in India can be described as an OLIGOPOLY.


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Idea CellularIdea CellularIdea CellularIdea Cellular is an Aditya Birla Group Company, India's first truly multinational

corporation. Idea is a pan-India integrated GSM operator offering 2G and 3G services,

and has its own NLD and ILD operations, and ISP license. With revenue in excess of $4

billion; revenue market share of nearly 15%; and subscriber base of over 121 million in

FY 2013, Idea is Indias third largest mobile operator. Idea ranks among the top 10country operators in the world with a traffic of over 1.5 billion minutes a day.

Ideas robust pan-India coverage is built on a network of over 100,000 2G and 3G cell

sites, spread across over 55,000 towns in India. Using the latest in technology, Idea

provides world-class service delivery through the most extensive network of customer

touch points, comprising nearly 4,500 exclusive Idea outlets, and over 7,000 call center

seats. Ideas customer service delivery platform is ISO 9001:2008 certified, making it

the only operator in the country to have this standard certification for all 22 service areas

and the corporate office.

Idea has consistently stayed ahead of the industry in VLR reporting. Ideas thought

leadership on Mobile Number Portability (MNP) has enabled it to stay as the top gainer

with the highest net gain. Every 4th mobile user who exercises choice through MNP

prefers Idea.

Idea offers a range of high-speed mobile broadband devices including Android based 3G

smartphones, dongles etc.Ideas wide portfolio of 3G smartphones offer the latest in 3G

applications and high-end data services such as Idea TV, games, social networking etc.

at affordable prices.

Idea has been a pioneer in introducing customized product offerings for segmented

customers. It is the first mobile operator to introduce innovative value added services in

the Indian telephony market, and has remained ahead of the industry in data product

offerings.


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OBJECTIVESOBJECTIVESOBJECTIVESOBJECTIVES To study the oligopoly market structure and note down its distinct characteristics

To analyze the Telecommunications sector in India and to check whether oligopoly

exists or not in the mentioned sector.

To analyze Idea, a major Telecom company functioning in India and discuss

strategies adopted by the company to function in an oligopoly market structure.

METHODOLOGYMETHODOLOGYMETHODOLOGYMETHODOLOGY

Data ForecastingData ForecastingData ForecastingData Forecasting: Use of secondary data to analyze various trends prevailing in

the industry and within the company.

Trend AnalysisTrend AnalysisTrend AnalysisTrend Analysis: Analyzing the companys performance and trend based on

historical data.

SWOT AnalysisSWOT AnalysisSWOT AnalysisSWOT Analysis: Analyzing the strengths weaknesses opportunities and threats to

the company

ComparComparComparComparative Analysisative Analysisative Analysisative Analysis: Study of characteristics of Indian telecom sector in light of

features of an oligopoly.


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ANALYSISANALYSISANALYSISANALYSIS

Oligopoly refers to a market situation in which there are a few firms selling homogeneous

or differentiated products. The main features of oligopoly are elaborated as follows:

1.1.1.1. FewFewFewFew firmsfirmsfirmsfirms

Under oligopoly, there are few large firms. The exact number of firms is not defined.

Each firm produces a significant portion of the total output. There exists severe

competition among different firms and each firm try to manipulate both prices and

volume of production to outsmart each other. For exampleFor exampleFor exampleFor example, the market for

automobiles in India is an oligopolistic structure as there are only few producers of

automobiles.

The number of the firms is so small that an action by any one firm is likely to affect

the rival firms. So, every firm keeps a close watch on the activities of rival firms.

2.2.2.2. InterdependenceInterdependenceInterdependenceInterdependence

Firms under oligopoly are interdependent. Interdependence means that actions of

one firm affect the actions of other firms. A firm considers the action and reaction

of the rival firms while determining its price and output levels. A change in output or

price by one firm evokes reaction from other firms operating in the market.

OLIGOPOLY

Few FirmsInter-

dependence

GroupBehavior

Nature ofthe

ProductIndeterminateDemandCurve

Barriers toEntry ofFirms

Selling Costs

Non-PriceCompetition


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For example, market for cars in India is dominated by few firms (Maruti, Tata,

Hyundai, Ford, Honda, etc.). A change by any one firm (say, Tata) in any of its

vehicle (say, Indica) will induce other firms (say, Maruti, Hyundai, etc.) to make

changes in their respective vehicles.

3.3.3.3. NonNonNonNon----PricePricePricePrice CompetitionCompetitionCompetitionCompetition

Under oligopoly, firms are in a position to influence the prices. However, they try to

avoid price competition for the fear of price war. They follow the policy of price

rigidity. Price rigidity refers to a situation in which price tends to stay fixed

irrespective of changes in demand and supply conditions. Firms use other methods

like advertising, better services to customers, etc. to compete with each other.

If a firm tries to reduce the price, the rivals will also react by reducing their prices.

However, if it tries to raise the price, other firms might not do so. It will lead to loss

of customers for the firm, which intended to raise the price. So, firms prefer non-

price competition instead of price competition.

4.4.4.4. BarriersBarriersBarriersBarriers totototo EntryEntryEntryEntry ofofofof FirmsFirmsFirmsFirms

The main reason for few firms under oligopoly is the barriers, which prevent entry of

new firms into the industry. Patents, requirement of large capital, control over

crucial raw materials, etc, are some of the reasons, which prevent new firms from

entering into industry. Only those firms enter into the industry which is able to cross

these barriers. As a result, firms can earn abnormal profits in the long run.

5.5.5.5. RoleRoleRoleRole ofofofof SellingSellingSellingSelling CostsCostsCostsCosts

Due to severe competition and interdependence of the firms, various sales

promotion techniques are used to promote sales of the product. Advertisement is in

full swing under oligopoly, and many a times advertisement can become a matter of

life-and-death. A firm under oligopoly relies more on non-price competition.

Selling costs are more important under oligopoly than under monopolistic

competition.


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6.6.6.6. GroupGroupGroupGroup BBBBehaviorehaviorehaviorehavior

Under oligopoly, there is complete interdependence among different firms. So, price

and output decisions of a particular firm directly influence the competing firms.

Instead of independent price and output strategy, oligopoly firms prefer group

decisions that will protect the interest of all the firms. Group behavior means that

firms tend to behave as if they were a single firm even though individually they

retain their independence.

7.7.7.7. NatureNatureNatureNature ofofofof thethethethe ProductProductProductProduct

The firms under oligopoly may produce homogeneous or differentiated product.

If the firms produce a homogeneous product, like cement or steel, the industry

is called a pure or perfect oligopoly.

If the firms produce a differentiated product, like automobiles, the industry is

called differentiated or imperfect oligopoly.

8.8.8.8. IndeterminateIndeterminateIndeterminateIndeterminate DemandDemandDemandDemand CurveCurveCurveCurve

Under oligopoly, the exact behavior pattern of a producer cannot be determined

with certainty. So, demand curve faced by an oligopolistic is indeterminate

(uncertain). As firms are inter-dependent, a firm cannot ignore the reaction of therival firms. Any change in price by one firm may lead to change in prices by the

competing firms. So, demand curve keeps on shifting and it is not definite, rather it

is indeterminate.


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In the context of Indian Telecom industry, the market share is dominated by a few

larger firms. A few smaller firms are also there but larger firms have a major chunk

of the total market share.

The above mentioned figures depict that over 80% of the market is held by 7 operators.

With this iWith this iWith this iWith this information, it can be concludednformation, it can be concludednformation, it can be concludednformation, it can be concluded that the nature of economic structure ofthat the nature of economic structure ofthat the nature of economic structure ofthat the nature of economic structure of

mobile telecom industry in India can be described as an OLIGOPOLYmobile telecom industry in India can be described as an OLIGOPOLYmobile telecom industry in India can be described as an OLIGOPOLYmobile telecom industry in India can be described as an OLIGOPOLY. It is supported by

further analysis in this work.

In Oligopoly, the large players have a significant share of the total market size. Immense

competition is concentrated within these competitors. The other competitors are small

and have a minor market share; they are also called niche players of the market. In

quantitative terms, oligopoly can be described as a structure which has very less number

of highly influential and strong competitors sharing market dominance.

Airtel, 24.4%

Vodafone, 19.5%

Relaince, 14.9%

Idea, 15.3%

BSNL, 8.2%

Tata,7%

Aircel, 5.3%

Market Share

Airtel

Vodafone

Relaince

Idea

BSNL

Tata

Aircel


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Indian Telecom In Light OfIndian Telecom In Light OfIndian Telecom In Light OfIndian Telecom In Light Of OligopolyOligopolyOligopolyOligopoly

1.1.1.1. Few SellersFew SellersFew SellersFew Sellers

There are few strong and influential firms operating in an oligopoly and are

competing against each other. The other few firms operating in the market are not

dominant and have an imperceptible share of the market. The smaller firms in the

market do not have the power to retaliate to the interdependency of the larger

firms. It suggests that firms in oligopoly are interdependent on each other for

decision making. Each firm measures, predicts or assumes its potential

competitors reaction when it chooses any business strategy. These decisions could

be regarding setting up / change in prices, output or product lines.

In a nation, where population is more than 1.3 billion, lies a huge market potential.

As mentioned in the introduction, the fact that there are just 10-12 active players in

the market, 7 of which constitute more than 80% of the markets share,

substantiates the few sellers assumption of oligopoly.

2.2.2.2. InterdependenceInterdependenceInterdependenceInterdependence

It is one the most highlighted feature of oligopoly. Interdependence in terms of

decision making processes. This happens because, the number of influential

competitors is few, and the change in price or output by any of the firm causes

direct effect on the income of its competitor. So demand of the product by the

market is not the only criterion that sets up the price of the service. It is also the

ruthless non-price competition that affects the setting up of prices.

The firms in the industry are dependent on each other over matters like pricing,

policy making, advertising and other issues. As a result of this interdependency the

firms have constituted an association called Cellular Operators Association of India

(COAI), which protects the common and collaborative interest of its members.

Example - One of the reports of COAI dated 21st October, 2011 raises the issue of

levying of huge penalties by department of telecom on the telecom operators for

minor technical and compliance issues, which was dealt by COAI. The competitors

dealt with this case as one organization. The establishment of this association

actualizes the interdependency of the firms.


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3.3.3.3. Entry and exit barEntry and exit barEntry and exit barEntry and exit barriersriersriersriers

The barriers are very high to enter and exit the industry. It is one of the many

reasons; firms in oligopoly have greater control within the industry. There can be

many barriers to enter this industry, some because of the nature of the industry and

some because the incumbent firms act as strong wall.

Few barriers are:

High start-up cost

Patents and copyrights

Government policies and restrictions

High advertising costs

Licensing costs.

The strategic actions of incumbent firms try to destroy nascent, discourage and

hinder the entry of new firms. Subsequently this aspect of oligopoly gives firms a

greater control over the market.

4.4.4.4. Telecom is a highly technologyTelecom is a highly technologyTelecom is a highly technologyTelecom is a highly technology----centric sectorcentric sectorcentric sectorcentric sector

Access to the technology typically requires a lot of investment. Ownership of

telecom license also represents huge entry barrier. Example Telenors investment

in India failed due to high investment that was required to acquire a telecom

license. They had to bid in an auction to get the license but could not match the

price quoted the market leaders of the industry. This example supports the

assumption of high barriers to entry.

5.5.5.5. Homogeneous or differentiated productsHomogeneous or differentiated productsHomogeneous or differentiated productsHomogeneous or differentiated products

There is no set standard in an oligopoly about homogeneity or differentiation of the

product/service. It varies from one industry to another. In telecom, the product is

homogeneous. As all the companies are dealing in the same product, that is

providing network for wireless telecommunication. But there are other examples

like leather industry, companies deal in leather products but there product lines are

different, like one company makes jackets, the other makes shoes, others deal in

belt and bags, but all are part of the leather industry. The service that is offered in

telecom is identical or completely homogeneous.


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Exclusive Assumptions To OligopolyExclusive Assumptions To OligopolyExclusive Assumptions To OligopolyExclusive Assumptions To Oligopoly

1.1.1.1. CollusionCollusionCollusionCollusion

Collusion is a secret agreement between entities for a profitable purpose.

Describing in economic terms it is, when firms operating in an industry cooperate

on some issues for mutual monetary or non-monetary benefits. It is often seen in

the market form of oligopoly. The decision of a few firms to collude significantly

impacts the market. Although collusion is illegal in many economies, it is still

practiced. The one practiced is called implicit collusion i.e. when firms make same

pricing decisions but do not consult each other. Sometimes the market leader takes

a price change decision and other firms tend to follow. In Indian telecom sector,

collusion was seen between companies to fix the spectrum price to be auctioned by

the government. Billions of dollars were lost due to this practice and several senior

executives of the firms were arrested for the charge.

There is a body working for the rights of the cellular providers, The Cellular

Operators Association of India (COAI) which was constituted in 1995 as a

registered, non-profit, non-governmental society dedicated to the advancement of

communication. COAIs main objectives are to protect the common & collective

interests of its members.

Price LeaderPrice LeaderPrice LeaderPrice Leader

There is a cut throat competition in the Indian Cellular market and there is

no scope of having a single Price Leader in the market, as all of them

compete for the prices and the customer base.

Abnormal ProfitsAbnormal ProfitsAbnormal ProfitsAbnormal Profits

There is no evidence of abnormal profits in the Indian Cellular Market, as

these providers are not competing among themselves for the higher market

share and the profits. The Indian cellular market is also regulated by

the Telecom Regulatory authority of India (TRAI). So there is very less chance

for the competitors to gain abnormal profits .


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2.2.2.2. Game theoryGame theoryGame theoryGame theory

Economists are interested in bargaining not merely because many transactions are

negotiated (as opposed to being entirely determined by market forces) but also

because, conceptually, bargaining is precisely the opposite of the idealized "perfect

competition" among infinitely many traders, in terms of which economists oftenthink about markets. Bargaining situations concern as few as two individuals, who

may try to reach agreement on any of a range of transactions which leave them

both at least as well off as they could be if they reached no agreement.

In simple terms, game theory can be described as the theory in which firms

competing against each other choose action or strategies that affect each

participant.

In the case of Indian telecomIndian telecomIndian telecomIndian telecom, the dominant players like Airtel, Vodafone, Relianceor Idea may settle for a reasonable share of the market, in lieu of their existing

market share. It analyses the interdependent behavior of the firms in an oligopoly. It

indicates the how the choices between operating firms affect the outcome of a

game.

Game theory is concerned with the choice of best or optimal strategy in conflict

situations. Strategic behavior refers to the plan of action or behavior of an

oligopolistic after taking into consideration all possible reactions of its competitors,

as they compete for profit or other advantages.

3.3.3.3. Kinked demand curveKinked demand curveKinked demand curveKinked demand curve

This is the most distinct feature of the oligopoly. The kinked demand curve

advocates two things about a firms demand curve. Each firms demand curve is

kinked at the prevailing price.

If any firm raises the price over and above the existing price, the competitors will

not follow this change and the firm will lose the market share. This would cause the

consumers to shift to the suppliers providing the same service for a lesser price.

If any firm lowers its price below the prevailing market price, the competitors will

also try and match the price to retain the market share. Hence the firms total

revenue will decrease and output will just increase marginally.


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Another feature kinked demand curve holds with itself is the price stickiness. The

price that is charged by the firms in oligopoly covers the cost of its production and

also gives them excess profit at times. The change in price comes with the

collaborative decision of the oligopolists. But the firms fear the loss of their market

share when price is hiked and not gaining much when price is reduced, this makesthem stick to the prevailing price and hence the price becomes sticky.

The cellular service provider industry already has a kinked demand curve. Below the

certain price, demand is inelastic and so lowering the price does not increase sales

by enough to offset the lost revenue per unit sold. (Total Revenue = Price x Quantity

Sold). This can be explained from the graph given below.

a)

Rivals will not follow a price increase by one firm therefore demand will be relatively

elastic and a rise in price would lead to a fall in the total revenue of the firm

b)

Rivals are more likely to match a price fall by one firm to avoid a loss of market share. If this

happens demand will be more inelastic and a fall in price will also lead to a fall in total

revenue.


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Costs That EffectCosts That EffectCosts That EffectCosts That Effect thethethethe IndustryIndustryIndustryIndustry

High infrastructuralHigh infrastructuralHigh infrastructuralHigh infrastructural costscostscostscosts

To enter service areas, service provider incurs huge set up and infrastructural

costs. These infrastructural costs to develop the service involve risks such as

logistical risks, longer time duration to launch the service, setting up of new

towers and dearth of highly skilled personnel to develop such infrastructures.

Allotment of spectrum by the GovernmentAllotment of spectrum by the GovernmentAllotment of spectrum by the GovernmentAllotment of spectrum by the Government

One of the major concerns of the industry is the availability of the spectrum that is

used for the supply of the service. It is provided by the government and has been

a controversial issue in recent times for this sector in India. Being a limited

resource, it gives a possibility of unhealthy bidding by the service providersresulting in unviable financial approach to the price thus hampering the growth of

highly competitive sector.

Regulation chargesRegulation chargesRegulation chargesRegulation charges

Immense competition in the industry and high regulatory charges imposed by the

government result in low tariffs by the providers. This indeed, makes it very

difficult for the operating firms to impede smooth implementation of the projects.Following gives the information about the regulatory charges firms have to pay to

the government.

o Regulatory charges

o Service tax

o License fees

o Spectrum charges


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IDEAIDEAIDEAIDEA CELLULARCELLULARCELLULARCELLULAR

Since, inception as Idea grew and evolved, it reinvented itself thrice.

Tagline/ SlogansTagline/ SlogansTagline/ SlogansTagline/ Slogans An idea can change your life

USPUSPUSPUSP Big brand with great service

SegmentSegmentSegmentSegment Middle and upper middle class

Target GroupTarget GroupTarget GroupTarget Group Students (majority out station), workers, labourers

PositioningPositioningPositioningPositioning Smartness that comes with using Idea

In the wireless sector, Idea has excelled overtime; comparing the compounded annualgrowth rate (CAGR) Idea has outperformed the Industry growth. An increasing trend can

be noticed over the financial years.

Theres a drastic improvement in Revenue market share (RMS) with an incremental RMS

of 26%.


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The above graph shows that idea has grown consistently in recent years and witnessed

an incremental RMS (IRMS) as compared to other major telecom companies whose

share keeps on fluctuating.


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In India there are 791mn users on mobile voice, 252mn have internet access, 233mn on

mobile internet, and a market of 560mn is still untapped. With low fixed line penetration,

mobile internet is their only way to get internet access and enter the digital era.


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STRATEGIESSTRATEGIESSTRATEGIESSTRATEGIES

I.I.I.I. Corporate Level StrategyCorporate Level StrategyCorporate Level StrategyCorporate Level Strategy

Mergers &Mergers &Mergers &Mergers & AcquisitionsAcquisitionsAcquisitionsAcquisitions

Industry heading towards imminent consolidation

Should target smaller companies with synergies

Subscriber base linked to allocation of additional spectrum

Proposed M&A norms by TRAI to revise upward the minimum number of

competitors to be present in each telecom circle.

Idea should consider gaining first mover advantage in consolidation.

DiversificationDiversificationDiversificationDiversification Broadband & IPTVBroadband & IPTVBroadband & IPTVBroadband & IPTV

BroadbandBroadbandBroadbandBroadband refers to telecommunication in which a wide band of frequencies

is available to transmit information.

(Internet Protocol TVInternet Protocol TVInternet Protocol TVInternet Protocol TV) Also called "TV over IP" and "Internet TV," IPTVIPTVIPTVIPTV refers to

the delivery of scheduled and video-on-demand (VOD) TV programs and

movies over the mobile phones.

Positive Side:Positive Side:Positive Side:Positive Side:

o Broadband Penetration of 1% (11.21 million)

o

Government Plan to increase broadband connectivity like Bharat Nirman

o 60,000 km of fibre optic network can be leveraged for backhauling

Negative Side:Negative Side:Negative Side:Negative Side:

o High Capital expenditure costs - Last mile connectivity

o Existing fixed line DSL Easier to convert to Broadband rather than new

provider

o IPTV Not enough bandwidth commissioned

Conclusion:Conclusion:Conclusion:Conclusion: Idea shouldnt diversify into Broadband services.

DDDDirectirectirectirect TTTToooo HHHHomeomeomeome

220 out of 370 million TV sets belong to low density rural areas

Synergize with telecom services for billing and customer support to the DTH


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Leverage powerful telecom brand and marketing campaign of What an idea

sirjee

Customer acquisition from the local cable operators

In-flight Wi-Fi using use DTH infrastructure for the same

II.II.II.II. Business Level StrategyBusiness Level StrategyBusiness Level StrategyBusiness Level Strategy

Coopetition (cooperative competition)Coopetition (cooperative competition)Coopetition (cooperative competition)Coopetition (cooperative competition)

Indus TowersIndus TowersIndus TowersIndus Towers

Its a joint venture between Airtel, Idea and Vodafone

110,000 towers worlds largest tower company founded in 2007

Aim was to decrease CapEx and Opex costs

3G Tie3G Tie3G Tie3G Tie----upupupup

Airtel, Idea and Vodafone - sharing the 3G networks in the circles where

they do not have licenses

Idea offering 3G services in Delhi, Kolkata via Vodafones network

Vodafone offering 3G services in Andhra, Kerala through Ideas network

Airtel offering 3G services in Gujarat through Ideas network

Rural PenetrationRural PenetrationRural PenetrationRural Penetration

Relative saturation of the Metros and Urban Areas - Urban Tele density for

wireless subscribers is 150.06mn

Lower penetration in the rural areas Rural Tele density for wireless

subscribers is 32.75mn

The growth rate in the rural subscribers has been 48% and 71% over the

last 2 years

Lower ARPU, increased CapEx and OpEx

Margins to be a result of the volumes rather than higher ARPU


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FUNCTIONAL STRATEGIESFUNCTIONAL STRATEGIESFUNCTIONAL STRATEGIESFUNCTIONAL STRATEGIES

OperationalOperationalOperationalOperational

Tower Infrastructure Indus Towers into all 22 circles

Sharing of the backhaul infrastructure, pooling of resources

Outsourcing of the call center operations (English)

FinancialFinancialFinancialFinancial: Low Cost Debt Financing in International Markets


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CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION

In the end to conclude we can say that the telecom industry in India operates in an

Oligopoly Market Form.

Idea is one of the leading companies of the Industry. This can be inferred from thefollowing facts:

There are a few companies operating. And of these few companies, 7 constitute

80% of the market and Idea being one of them.

All the companies like Airtel, Vodafone and Idea are interdependent on each other

and influence the industry.

There are barriers to enter and exit the industry, like government regulations and

licensing.

Its a highly technology based Industry, and success and failure depends on the

technology used.

All the companies provide homogeneous services.

They dont indulge in Price Competition.

Thus all these points prove that Telecom Industry in India operates in an Oligopoly

Market Form. And Idea is one of the leading companies of the industry.


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BIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHY

Wikipedia

Investopedia

Investor Presentation Q2FY15 www.ideacellular.com

DD Chaturvedi, Managerial Economics

H. Gravelle, Microeconomics

Oligopoly in the Indian Market

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