What Are Porter's Five Forces For Pakistani Telecommunication Industry?


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Five forces looks at five key areas namely threat of new entry, power of buyers, power of suppliers, threat of substitutes, and competitive rivalry.

Threat of New Entry
• As government of Pakistan is showing liberalism in case of telecommunication sector and opened its policies to award new licensees to new mobile service providers so threat of new entry is high.
• As set-up cost is in billions of dollars so in this case threat of new entry is low, but there are companies who are working to achieve licenses and approaching PTA to know terms and conditions for this.
• As for this business companies need a well established distributions and franchises network so threat of new entrant is high in this case.

Bargaining Power of Buyers
• Power of buyer is high in telecommunication sector. There are six market players and players are offering different packages at different prices and a situation of price war is running. Buyers have a power to buy any package which is suited to them.
• Cost of switching from one company package to other company package is low. Hence, power of buyers is high.

Bargaining Power of Suppliers
• The power of suppliers is low in case of telecommunication sector.
• But the fact is that numbers of suppliers are few in the market but they are competing in the market to make agreements with mobile service providers.

Threat of Substitute Products
• Government also gave so many land lines and wireless local loop licenses to different companies like PTCL wireless local loop, GO CDMA etc. these services in future will be like mobile phone services like they are planning to offer services a lot but currently they are offering SMS and CLI services to their customers.

Rivalry among Competing Firms in Industry
• Currently there are six market players but in future they will be eight and nine oe even more.
• Thuraya satellite service is offering subscribers freedom of mobility and uninterrupted service. Thuraya's satellite technology supplements of existing mobile service providers, overcoming the challenges of large geographical areas and insurmountable terrain.

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