Oligopoly of 3 telecommunication firms: Maxis, Celcom and Digi Essay

In the telecommunication firm in Malaysia, there are powerful competitions within it. Maxis, Celcom, and Digi are the example of it. As there are good competitions within all these firms, the profit margins that can be earned by each firm will reduce. Since there are a few large producers that are competing with each other, telecommunication firms will have to reduce the price of their service to gain higher market share which can lead to an increase in their profitability. For example, Maxis has introduced a cheaper prepaid and IDD packages among the foreign workers with attractive price rate. Celcom has launched the Celcom First Voice Plan which is to help the group expand its subscriber base and customers. However, it was analyzed that in the prepaid market segment, it has a high customer attrition rate where there is nearly no customer loyalty and the customers will then switch to different operators as time goes by. This can be a huge game changer for a firms sales.
Maxis, Celcom and Digi are considered as 3 large sellers competing with each other. These 3 telecommunication firms are considered as oligopoly. Oligopoly is also known as a market structure in which a small amount of interdependent firms compete with each other. These firms have set higher barriers to entry, in order to prevent easy entry of the new firms because their competitiveness is high among themselves. Even though it is like that, they are mutual interdependent with each other over controllability of price. Their entities are so small that each of the firms has to keep track of the responds and reactions of their competitors in changing the policy of price. However, the most complicated problem faced by the oligopoly firms is to decide whether to compete or to cooperate among themselves. That is why if Maxis, Celcom, and Digi are going to cooperate together, a larger monopoly can be formed and they will able to enjoy more profits.
If Maxis, Celcom and Digi cooperate among themselves, the revenue of the firm will increase. Thus, they will also be able to provide a better customer service to the customers. With high satisfaction from customers, they will automatically stick to the company. This will cause the firms to increase their profit. Besides that, as firms cooperate together, there will be larger investment where the average cost reduce because there will be a larger output quantity economics of scale. However, there is always a drawback. The disadvantage of the firms merged together is that there will be an excessive labour. An excessive labour will cause the firm to reduce the staffs working capital. By doing this, they can then save a lot of labour cost. On the contrary, many people will start losing their job. Meanwhile if they compete, each of the firms are needed to provide better services and more competitive price. In addition, the firms are also required to provide additional services in order to attract more customers to gain more revenue