Will Just 3 Indian Mobile Operators Have 97% Share in a Year?

In the fourth quarter of 2016, Bharti Airtel had a market share of 33 percent, Vodafone India had about 24 percent, while Idea Cellular had nearly 19 percent. If Vodafone and Idea merge, the new entity would have about 43 percent share, and become the market leader.

Perhaps that is one way to position Reliance Jio’s aggressive market share goal, which is to attain 50 percent market share in about five years. Some might call that more than ambitious. Others would say that if the new leader has 43 percent share, Reliance Jio is not simply dreaming in setting a 50-percent share goal.

Tata Teleservices had about six percent share, Aircel about 5.5 percent share and Reliance Communications about four percent share, according to HSBC.

So what would a stable Indian mobile market look like? In capital-intensive markets where scale matters, it might be reasonable to expect the market shares of the largest three providers to follow a rough pattern: the leading provider is followed by the number-two provider with half the share of the leader, while the third provider has half the share of the number-two provider.

In other words, it would not be unreasonable to expect that if the leader has 40 percent share, number two has 20 percent share, while number three has 10 percent share. That pattern would have the leading three providers sharing about 70 percent of the market.

In the mobile business, it is not unreasonable to expect stable patterns that have the top providers holding even more share than that. In a market where the leader has 50 percent share, number two could have 25 percent share, while number three has 12.5 percent share, for a total of 87 percent market share.

That is not so unusual. In fact, some believe that could happen. Even now, the smaller providers collectively have about 25 percent market share. Over the next year, they could lose as much as 85 percent of that share to the top-three Indian mobile operators. That could mean 21 percent more share for the top three providers.

So the top three might hold about 97 percent share in a year. In that case the 50-25-12.5 percent share pattern would be quite feasible. In an unstable pattern, the shares held by each of the top three might be something like 40-30-20, after the consolidation.

So while 50-percent share is likely a stretch, it is not impossible.