Wireless Telecommunications Carriers in Australia

Wireless Telecommunications Carriers in Australia

    Mobile Phones have been in existence in Australia for over two decades. Great revolution has incurred during this period. Australia's telecommunications market was formally opened to full competition in July 1997. Before that, there were restrictions on the number of licensed operators and anti-competition mechanisms, avoiding the realization of a full competitive market. Over the past five years, consumers have rapidly adopted wireless broadband services via smartphones, tablets and 3G dongles. The strong desire for remote Internet connectivity has not been tempered by the relative high usage prices of mobile versus fixed broadband services. Telstra dominates the market with more than 10 million subscribers, Optus has around eight million and Vodafone Hutchison Australia has roughly seven million. (Nick Flores, 2014,).
Market Definition

     First of all, we confine the analysis to companies that deliver direct communications via airwaves and provide wireless telecommunication network services. The industry has one of the highest levels of concentration in the Australian economy.  Since deregulation in 1997, the number of industry participants has increased to four. In early 2009, Vodafone and Hutchison agreed to merge their Australian mobile operations under the Vodafone brand. (Liam Tung,2009) The three major players account for nearly 90.0% of industry revenue. (Nick Flores, 2014) Thus, we will largely pay attention to the competitive battle among the three companies. These three companies compete nation-wide, there are no meaningful geographic submarkets in which other companies compete.

     Providing 16 million mobile services, 7.5 million fixed voice services and 3 million retail fixed broadband services, Telstra is Australia’s largest telecommunications provider for phone and broadband Internet coverage.(Telstra our-company,2014) .It enjoys the highest margins of all Australian telecommunication providers due to its dominance and scale advantages in comparison with its competitors. It occupied a market share of 45.8% and estimated to earn a profit of 9.9 billion in 2014.

    Optus is the second-largest provider of telecommunications services in Australia. It occupied a market share of 24.5% and estimated to earn a profit of 5.3 billion in 2014. Its mobile unit generates the majority of profit at just under 65.0%.

    VHM^[1] is the nation's third-largest mobile service provider. Vodafone and Hutchison announced an agreement to merge their telecommunications businesses in Australia in February 2009, suggesting a positive step for both companies. Previously, Vodafone and Hutchison undermined each other's profitability. With their resources combined, now they have the scale to compete effectively. It occupied a market share of 15.4% and estimated to earn a profit of 3.2 billion in 2014.

Internal Rivalry

    On the whole, internal rivalry is high. The struggle for market share and increased profitability reflected in the industry is mainly based on the following factors: price, quality and scope of service, branding and marketing.