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MICHAELPORTERINDUSTRYS

ANALYSISINRELATIONTOTELECOMINDUSTRY

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MICHAELPORTERS 5 FORCEANALYSIS

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INDUSTRYHISTORY

1851 First operational land lines were laid by thegovernment near Calcutta.

1881 Telephone service introduced in India.

1985 Department of Telecommunications (DOT)established.

1986 Conversion of DOT into two whollygovernment-owned companies: VSNL, MTNL.

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1999 Cellular Services are launched in India.

2000 DoT becomes a corporation, BSNL.

Today, India is the largest market in the world of

about 20 million mobile subscriber lines everymonth in an average.

The FDI cap in the telecom sector in India is74 %.

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RIVALRYAMONGEXISTINGFIRMS

MAJOR TELECOM PLAYERS IN INDIA

State owned companies ( Bsnl and Mtnl ).

Private Indian owned companies (Ril and Tata ).

Foreign invested companies (Vodafone, Bharti Tele-Ventures, Idea Cellular, Spice Communications).

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BARGAINING POWER OFCONSUMER

Consumer is the ultimate source on which thecompany is depended

The ability to influence the setting of prices

Monopsonistic or quasi-monopsonistic buyers willuse their power to extract better terms (higher profitmargins or ) at the expense of the market.

The company should try to set the prices keeping inview the power of buyers

http://en.wikipedia.org/wiki/Monopsonyhttp://en.wikipedia.org/wiki/Monopsony

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In telecom industry, service providers are the maindrivers.

The major booster is the wireless mobile subscriberbase.

Other services like Internet subscriber base hasalso provided significant growth.

Wireline subscriber base has been declining inrecent years.

Subscriber base for some of the companies likeBharti Tata (Tele & Communications), MTNL andReliance increased marginally.

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MARKETSHAREOFWIRELESSOPERATORS

Sl. No. OPERATORS MARKET SHARE(%)

1 BHARTI 23%

2 BSNL 19%

3 RELIANCE 17%

4 VODAPHONE 16%

5 TTSL 10%

6 IDEA 9.6%

7 OTHERS 5.4%

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BARGAININGPOWEROFSUPPLIERS

As far as telecom industry is concerned, it is servicebased industry which is intangible.

The role of suppliers will be very minimum that too

in different domain.

Some of those type are

(1) Mobile hand set suppliers.

(2) Optic or aluminum fiber suppliers.

(3) Soft ware suppliers.

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THREATSTONEWENTRANTS

The Indian telecom industry has always allured foreign investors.

From August 1991 to March 2007, in the telecommunicationsector FDI inflow amounted is US $ 3,892.19 million.

Telecommunication is the third-largest sector to attract FDI in

India in the post liberalization era.

Some of the companies which started from state level andstarted operations national wide are

(1) Aircel.

(2) Spice.

(3) Unitech. etc.

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SUBSTITUTE TO PRODUCT

Telecom sectors offers a wide range of services inIndia, such as wire line , CDMA mobile, GSMmobile, internet, broadband etc.

Out of all the only substitute or option is Internettelephone, best video support and cheaper is anadded advantage to that.

The leading internet service provider in INDIA isstate owned company BSNL at 45.2 % share value.

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