Research on Price Elasticity of Demand for Telecom

3710 Words Nov 30th, 2012 15 Pages
Research on Telecommunications pricing
Research on Telecommunications pricing

Prepared By:
Mina Ibrahim

Prepared By:
Mina Ibrahim

Contents 1
Executive Summary 2
Theoretical Background 3
The Theory of Price 3
The Demand Function 3
The Demand Function for Telecom industry 4
The availability and price of Substitutes & Complements 4
Research Background 6
The Egyptian Scenario 6
The Egyptian Company for Mobile Communications (Mobinil) 7
Important Milestones 7
Mobinil Market Position 9
Research Analysis and Results 10
Quantity Demand Analysis 10
Cross Demand Function 11 12
Regression Analysis 13
Research Conclusion 16

Executive Summary

Telecommunication is a fast growing industry which is promising its investors secured
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A 4 per cent decline was incurred in its share price during trading in Cairo.
The Demand Function for Telecom industry
The availability and price of Substitutes & Complements
Fixed Line

As discussed in the theoretical part, mobile phones have come to substitute the fixed line industry as they provide a very important feature which is not found in the fixed lines which is the portability feature.

The below figure shows the rise of the number of subscribers for both the mobile market and the fixed line market

Figure [ 2 ] Mobile Operator Total Number of Subscribers and Penetration Rate

Figure [ 3 ] Fixed Line Subscribers and Penetration Rate
We can see clearly how the penetration rate and growth rate for mobile subscribers has exceeded by far the rates for fixed line subscribers.
These figures suggest that phone users in Egypt see the mobile telecommunications as a strong substitute to fixed line phones. We can clearly notice this as mobile phones has been in the hands of the rich and the poor; from a famous business man who uses the phone for important conference calls and emails to the poor grocery man who uses his phone as part of his on-going business receiving requests for delivery items.
The pricing schemes as well has its factor of having the mobile communications as a stronger substitute, below figures shows the fixed line pricing schemes

Figure [ 4 ] Fixed Line Pricing Schemes
The rates has been less by far in

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