Telecommunication Industry in Australia

• Within the industrial group describe trends in relation to production, number of participants, prices, competition both domestic and from imports, employment, investment and profitability.

The background of telecommunication industry in Australia

Since 1991 the Australia Government passed a new Telecommunications Act that introduced changes to the Australian telecommunications industry designed, all things going well, to eventually lead to the opening of the market to full-scale competition (ABS). Hence, after a long bidding process for a second telecommunications license, a single private player, Optus, was allowed to enter the Australian telecommunications marketplace for national long distance and international telephone calls. Over time, further steps towards open competition were made. Vodafone was permitted to enter the mobile telephony market with an exclusively digital license in 1992 and began actively marketing products and services in 1993, which is the third player to the emerging mobile industry (Vodafone 2007). In addition, Optus began using its own infrastructure from 1993. As part of these changes Telecom and OTC were merged to form a single government player, the Australian and Overseas Telecommunications Corporation, renamed Telstra in 1993.

All of these gradual changes had one principal aim: to test the waters of competition in the Australian telecommunications industry in a carefully monitored and relatively stable environment. The 1991 Act declared that if a review pronounced the experiment a success full-scale competition would be introduced by 1997 (ABS). As 1997 rolled round the review was completed, giving a positive, if slightly tentative, verdict. Finally, telecommunications had become the fastest growing industry in Australia.

Definition and concept of related industries

Based on Australian and New Zealand Standard Industrial Classification (ABS 2013), the subdivision, telecommunication service industry is belonged to Division J information and telecommunication and it is defined as telecommunications companies are mainly engaged in operating, maintaining or providing access to facilities for the transmission of voice, data, text, sound and video over wire, cable, wireless and satellite networks. However, Not all subdivision participants own and operate telecommunications infrastructure. For example, telecommunications resellers purchase network capacity and then retail services to businesses and consumers.

Our client VHA is entirely focused on wireless telecommunications filed, but Telstra and Optus participate in both wired and wireless areas of the subdivision. Furthermore, VHA is a relatively new major player, only coming into existence in February 2009 out of a merger between the Vodafone Group and Hutchison Whampoa Group’s telco businesses. On other hand, IBISWorld (2015) defined the wireless telecommunications carriers industry as it includes businesses that operate and maintain transmission and switching facilities to deliver direct communications via airwaves. The industry also includes establishments that provide wireless telecommunications network services, and those that supply and maintain equipment used to receive signals. If discussing VHA in communication service industry cannot objectively and appropriately present the company performance. Thus, this report regards wireless telecommunication carriers industry as the base to analyze VHA.

Current performance of industry

The Wireless Telecommunications Carriers industry has expanded slowly over the past five years (IBISWorld 2015). Revenue benefits from growing mobile phone penetration, driven by the increasing popularity and adoption of smartphones, have largely been o set by strong price competition. The smartphone revolution, demonstrated by the ubiquity of Apple iPhones and Android phones, has contributed to the rapid growth of mobile broadband services over the past five years. What’s more, Industry revenue has grown over the past five years due to the proliferation of 3G and 4G mobile technologies. However, capped pricing plans used by Telstra, Optus and Vodafone Hutchison Australia (VHA) to attract customers have decreased the average revenue generated per user.

Profitability has increased modestly over the past five years, largely due to growth in mobile subscriptions. This growth has allowed industry operators to obtain greater economies of scale, which has strengthened industry profitability. In an attempt to maintain pro t margins, the industry has focused on improving productivity by curbing wage costs. Telstra has cut its employment numbers and allocated greater resources to wireless telecommunications services as they have increased in significance. The outsourcing of low-value work to countries with lower wage costs has been o set by the need for highly skilled personnel, such as engineers, to maintain and update a growing infrastructure base. Employment has decreased over the five years through 2015-16, as major players (particularly VHA) have reduced their local employee base. At present, the employment decreases to 18268 in the industry.