The big players in Indian Telecommunication sector are continuously reporting the losses. Recent merger of Idea-Vodafone, collapse of Vodafone and big losses by Bharti Airtel are showing the serious phase of the telecommunication sector. Therefore, it is important to analyse whether the sector which was near to perfect competition is moving towards monopoly or not. Post-Jio era, there was a merger of Idea-Vodafone which means one absolute player gets reduced in the market. Another big player Bharti Airtel is also facing the problems. In this difficult period only Jio is earning the profit which is also increasing (figure no.1 )

Figure no.1 Profit reported by the companies

Data source: CMIE, Centre for Monitoring Indian Economy

To measure the concentration index, Herfindahl-Hirschman Index (HHI) is used. To calculate the HHI we have taken the sales share of top 10 companies (not in percentage form).

If it is moving towards one then it means market is moving away from the perfect competition while if it is moving towards zero then it means market is moving towards the perfect competitions.

Figure no.2 Concentration Index (Herfindahl-Hirschman Index (HHI))

Data source: Author has calculated HHI by using the data from CMIE, Centre for Monitoring Indian Economy

Post-Jio, HHI has increased drastically. It was 0.08 in 2010 and now it is increased to 0.15 in 2018.

In this short write up, we have found two important points.

1. The profit of all big players is falling, rather it is negative.
2. Post Jio, concentration index is increased (partially due to merger and partially due to market capturing practices by Jio)

Now, if this was predicted by policy makers, if Jio’s entry was harmful for competition then why the Jio’s entry and its business practices are not questioned by the regulatory bodies as well as Competition Commission of India? These questions highlight the crony capitalism i.e. relationship between governing body and businessmen.

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