South Asian Telecom Industry- Porter's Five forces analysis
Mapping the South Asian Telecommunication Industry using Porter’s Five Forces Analysis
Telecommunication industry, which is an oligopolistic market, is growing rapidly almost everywhere in South Asia. Along with the “Voice” Business moving in to a saturated state, the operators are focusing on growing revenues through data business. However, data being a low margin business many operators are shifting from simply providing data to becoming a life style requirement provider.
In terms of access technologies, DSL is turning out to be the most popular access medium, while cable networks are developing a strong presence. Together with the Wireless technologies have taken over the position of wired technologies. Further, Government initiatives in some parts of the region have already been taken to accelerate the rollout of broadband to where it is today, and the regulatory bodies help ensure that South Asia maintains the quality of the service and fair competition.
In order to survive in the industry, the industry players require shifting gears to providing human needs beyond traditional Telco. Thereby, we conclude Telecommunication industry ROCE is marginally above or equal to the cost of capital making it a moderately attractive investment.
Threat of new entrants - Low
The telecommunication industry claims to be a business with an expensive start up where the cost of active equipment is estimated to be 40 percent of the telecom operator’s total capital expenditure (CAPEX) and the balance are accounted for time to set footprint and to acquire spectrum. Therefore, the contenders require producing sufficient cash flow to absorb the cost of expanding the network coverage that become obsolete seemingly overnight.
The well established companies own extensive networks that stretch directly to their customer destinations. In order to cover up their initial capital expenditure for the tangibles, they facilitate their competitors including the small players in the market
Telecommunication industry, which is an oligopolistic market, is growing rapidly almost everywhere in South Asia. Along with the “Voice” Business moving in to a saturated state, the operators are focusing on growing revenues through data business. However, data being a low margin business many operators are shifting from simply providing data to becoming a life style requirement provider.
In terms of access technologies, DSL is turning out to be the most popular access medium, while cable networks are developing a strong presence. Together with the Wireless technologies have taken over the position of wired technologies. Further, Government initiatives in some parts of the region have already been taken to accelerate the rollout of broadband to where it is today, and the regulatory bodies help ensure that South Asia maintains the quality of the service and fair competition.
In order to survive in the industry, the industry players require shifting gears to providing human needs beyond traditional Telco. Thereby, we conclude Telecommunication industry ROCE is marginally above or equal to the cost of capital making it a moderately attractive investment.
Threat of new entrants - Low
The telecommunication industry claims to be a business with an expensive start up where the cost of active equipment is estimated to be 40 percent of the telecom operator’s total capital expenditure (CAPEX) and the balance are accounted for time to set footprint and to acquire spectrum. Therefore, the contenders require producing sufficient cash flow to absorb the cost of expanding the network coverage that become obsolete seemingly overnight.
The well established companies own extensive networks that stretch directly to their customer destinations. In order to cover up their initial capital expenditure for the tangibles, they facilitate their competitors including the small players in the market