Bharti Airtel may be re-drawing plans for Sri Lanka


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  • Mar 28, 2007
    Galle, Sri Lanka
    Colombo, Feb 25 (IANS) Indian telecom giant Bharti Airtel, which had announced its entry into the Sri Lankan mobile phone sector with much fanfare last year, is experiencing delays and may well be re-drawing its investment plans for the island country, says a Sri Lankan telecommunication expert.

    Rohan Samarajeewa, former head of Sri Lanka's Telecommunication Regulatory Commission (TRC), told IANS that while there was no doubt that Bharti Airtel was committed to operating in Sri Lanka, it had altered its timetable and could well be scaling down its original investment plans.

    The reasons for the delay in starting the operations were in the realm of speculation, Samarajeewa said. But he did point to a possibility of difficulties in getting frequencies from the TRC, as it is generally recognized that the allotment of frequencies tends to be "highly politicised" in Sri Lanka.

    The parent company in India could also be changing its priorities as regards capital allocations, in the context of the growing challenges in the more lucrative Indian domestic market, Samarajeewa said.

    "Even assuming that the mobile phone market in Sri Lanka is 10 million, it is still only the size of a metropolis in India. It is therefore possible that Bharti Airtel is looking at some of the Indian states with greater interest," he said.

    In 2007, Bharti Airtel had set up a Sri Lankan subsidiary, Bharti Airtel Lanka Pvt Ltd., got a license to provide 2G and 3G services in collaboration with China's Huawei Technologies, announced an investment of $200 million and began to recruit a large staff. The services were to begin by 2007 end. This subsequently got postponed to early 2008. But, as yet, there are no signs of an early start.

    "When it announced its entry, I expected Bharti Airtel to literally slaughter the existing players. But given the recent changes in the price structure here, and the intense competition in the field, the Indian company will have to be quite creative if it is to be more than just a minor player," Samarajeewa said.

    The market is small and crowded. The fixed line and mobile phone penetration in Sri Lanka is very high. Forty to 50 percent of the households in the island (excluding the war-affected north and east) have access to a phone. Out of a total population of 20 million, six million have mobile phones. With the recently announced price reductions, the user-base is expected to rise to 10 million, or half the total population of the country.


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