Question

Asian-based telecom operator recently announced that it was launching Virgin Mobile as a new telecom brand within the country. It would operate in conjunction with Etisalat and Du. Assuming the trend continues, and the government opens the market for private and

foreign players. You are required to –
a. Apply your understanding and concepts from microeconomics, to investigate and summarize the major characteristics of the emerging market form in the telecom industry.
b. Describe and analyze the pricing policies that you would expect to find in this industry.

Answer 1

A).

1. Growth and investment potential - Allowing foreign players in telecom industry will lead to growth of telecom industry, better quality of services and foreign investment in country will lead to growth of country.

2. Per capita income - Allowing foreign investors will lead to demand of jobs for domestic people which lead to increase in per capita income.

3. High rate of economic growth- Investment in infrastructure, increase in per capita income, decrease in unemployment.

Govt. should provide subsidy in land for setting up telecom towers which will boost foreign investment in domestic country. Govt. will get better price in spectrum auction as private player will increase in sector.

With better telecom service lead to better internet and call facilities which further leads to increase in demand of e-commerce business and ultimate leads to growth of economy.

B).

Using competitve pricing with existing telecom operators will be best pricing policy of new entrants in market.

Better services attract better prices for service providers. Tie ups with mobile handset brands for better pricing can be one of the policies for launch. It can also offer competitive price to consumer with better services and more coverage.