A paper titled Market Structure, Profitability and Regulation of Telecommunication Industry in India, co-authored by Professor Madhuri Saripalle, Professor, Economics and Chairperson – MBA Programme at IFMR GSB, Krea University and Dr Surabhi Somya, a PhD alumna of IFMR GSB, Krea University and currently a Consultant at Deloitte USI, Financial & Risk Advisory, has been published in Global Business Review.
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 analyses the determinants of profitability of the industry during 2010–2022 using the conventional structure-conduct-performance paradigm. The authors estimate a dynamic panel data model to understand the role of endogeneity and profit persistence in the industry. Results suggest that there is profit persistence in the industry. Among conduct variables, export intensity has a positive impact while selling and import intensities has a negative impact on profitability. While size is not significant, industry concentration 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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