Entry relaxation and an Independent regulator: Performance impact on the mobile telecoms industry in Asia

Book chapter, 2011

This chapter examines empirically the effect of entry relaxation on the performance of the mobile telephone firms and the role of regulators in the Asian countries of Hong Kong, Indonesia, Japan, Malaysia, Republic of Korea, Singapore and Thailand. Two hypotheses are tested: first, that the sector performance (as measured by mobile teledensity) improves after the entry relaxation and establishment of the independent regulator; second, that performance of incumbents declines after the entry relaxation. The sample in this study consists of 14 listed incumbent mobile network operators during 1990–2007. The data are collected from the International Telecommunication Union (ITU), the World Development Indicators Database (WDI), DataStream and websites of companies. The results show that the macroeconomic variables, entry relaxation and independent regulator variable have significant positive impacts on mobile teledensity. For the second hypothesis, the results show that entry relaxation does not affect the profitability of incumbent firms for either developed or developing countries during the study period, but it affects the operational efficiency and financing. Thus, if the regulatory structure is in place and on time, there will be potential benefits to the mobile telecommunication sector and consumers.