Analysis of the Communication Industry - Vodafone

ANALYSIS OF THE TELECOM INDUSTRY VODAFONE

The attractiveness of the telecommunications industry will be x-rayed by elaborating upon Porter's 1980 five forces:

*BUYERS

There has been a surge in the enlargement of subscribers base in the developing economies, in 2005, the mobile subscribers base was about 2-billion, it reached 3-billion in 2007 and its about 4.5-billion now. In 2007,70% of the world's mobile subscribers are found in the developing countries and now these emerging economies account for about 85% of the net increase in the worldwide subscriber's base.

In the developed economies, operators face fierce competition and consumers demand for more features this has lead to companies trying to cut costs.

RIVALRY

The European and other advanced economies telecommunication market are highly saturated and regulated and as such are characterized by high levels of competition, furthermore the emergence of Mobile Virtual Network operators has gone a long way in further deepening the competition, this development has led in a further fall in the Average Revenue per User (ARPU), whereas the markets in the emerging economies are relatively untapped and less regulated.

The main competitors of Vodafone include: Telefonica O2, T-Mobile, Orange, "3", China mobile, MTN, Airtel etc.

SUBSTITUTES

Fixed-mobile line conversion is a real future prospect for network operators, but in the recent past the total number of fixed lines has been on the decline, reason been their substation by mobile service, a survey by the European commission indicates that 15% of household are mobile only, and industry experts foresee a new era where consumers will be completely mobile, a prospect that is highly attractive to mobile operators.

However, internet calling services through VOIP such as Skype are on the rise, its initiative is expected to trigger a reaction and an imitation pattern that will cause further price pressure within telecommunications industry.

ENTRANTS

The industry especially in the advance economies are highly regulated and protected by significant barriers to entry and high initial fixed cost requirements, but the increasing interdependence between mobile network operators and online entertainment providers (music, Video etc) leads to a redefinition of the industry boundaries.

The expanding boundaries of the market could provide further opportunities by allowing Vodafone to enter more aggressively into fixed lines services and to better enjoy the benefits of its high investments in 3G technology.

THREATS

The