With a subscriber base of more than 680 million, the Mobile telecommunications industry in India is the second largest in the world and it was thrown open to private players in the 1990s. Competition has caused prices to drop and calls across India are one of the cheapest in the world. In September 2004, the number of mobile phone connections crossed the number of fixed-line connections and presently dwarfs the wire line segment by a ratio of around 20:1. The mobile subscriber base has grown by a factor of over a hundred and thirty, from 5 million subscribers in 2001 to over 680 million subscribers as of Sep 2010. Some of the major service providers are Vodafone, Airtel, and Idea etc.
Porter’s Five Forces Model – Mobile Phone Industry in India We have used Porter’s Five Forces model to determine the attractiveness of the Mobile phone Industry in India 1. Threat of intense segment rivalry - High
There is excessive competition in this sector. There are many strong and aggressive competitors offering similar services eg. Vodafone, Airtel, Idea etc. The consumer has a lot of choice. However, since the mobile phone service industry is growing at a stable rate there are a large number of customers and therefore there is little pressure to take customers from competitors. The mobile phone service companies have high fixed costs as a result of which they try to increase their productive capacity which leads to intense competition. The customers can switch to another operator at very little cost. The competitors can easily attract customers by offering better services, lower prices and aggressive advertisement campaigns. The Exit barriers for the mobile industry are moderate because the initial investment is so huge that it takes time to recover the money & exit could result in losses but at the same time there are no government or social restrictions involved. Result: Unattractive
2. Threat of New Entrants – Low