Market Structure, Profitability and Regulation of Telecommunication Industry in India

IF 2.3 Q3 BUSINESS Global Business Review Pub Date : 2024-03-04 DOI:10.1177/09721509241232198
Madhuri Saripalle, Surabhi Somya
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Abstract

The telecom industry in India has witnessed exponential growth in the past decade; however, its profitability has been on the decline post 2008. This study analyzes the determinants of profitability of the industry during 2010–2022 using the conventional structure-conduct-performance paradigm. We estimate a dynamic panel data model to understand the role of endogeneity and profit persistence in the industry. Our findings are contrary to what the theory predicts and highlight the importance of the regulatory and institutional framework of the industry. Results suggest that there is profit persistence in the industry. The study finds that among conduct variables, export intensity has a positive impact while selling intensity has a negative impact on profitability. While size is not significant, concentration has a negative impact on profitability. Import has a negative impact on profitability. These results suggest that as the telecom industry transitioned from a monopoly to an oligopolistic market with players competing in different domains and services, selling and advertisement intensity has diminishing returns to profitability while export intensity emerges as an important driver of profitability. Results also suggest the importance of the production-linked incentive scheme encouraging exports and the need for regulating concentration and encouraging import substitution.
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印度电信业的市场结构、盈利能力和监管
印度电信业在过去十年中实现了指数级增长,但其盈利能力在 2008 年后却一直在下降。本研究采用传统的结构-行为-绩效范式,分析了 2010-2022 年期间该行业盈利能力的决定因素。我们估计了一个动态面板数据模型,以了解行业内生性和利润持续性的作用。我们的研究结果与理论预测相反,凸显了行业监管和制度框架的重要性。结果表明,该行业存在利润持续性。研究发现,在行为变量中,出口强度对盈利能力有积极影响,而销售强度对盈利能力有消极影响。虽然规模不重要,但集中度对盈利能力有负面影响。进口对盈利能力有负面影响。这些结果表明,随着电信业从垄断市场过渡到寡头垄断市场,参与者在不同领域和服务上展开竞争,销售和广告强度对盈利能力的回报递减,而出口强度则成为盈利能力的重要驱动因素。研究结果还表明,与生产挂钩的激励计划对鼓励出口非常重要,而且有必要对集中度进行监管并鼓励进口替代。
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来源期刊
CiteScore
7.10
自引率
12.50%
发文量
107
期刊介绍: Global Business Review is designed to be a forum for the wider dissemination of current management and business practice and research drawn from around the globe but with an emphasis on Asian and Indian perspectives. An important feature is its cross-cultural and comparative approach. Multidisciplinary in nature and with a strong practical orientation, this refereed journal publishes surveys relating to and report significant developments in management practice drawn from business/commerce, the public and the private sector, and non-profit organisations. The journal also publishes articles which provide practical insights on doing business in India/Asia from local and global and macro and micro perspectives.
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