Sri Lankan telcos under strain

At least two telcos will exit the Sri Lankan market given the saturation in the industry and its fragmentation where margins are squeezed to the hilt, telco analysts say.

“The market is saturated so much that consolidation of telcos has to happen in the medium term,” an analyst said.

Views on consolidation were also echoed by Dialog Chief Executive Officer, Hans Wijesuriya at a media conference after ringing the opening bell of the Colombo Stock Exchange this week, when he said that "The market is too big for five players, so consolidation might be a good idea."

Analysts say that it's a matter of time be- fore smaller telcos start discussions with their larger counterparts for sell offs. Hutchison Telecom started negotiations with Mobitel for a deal worth US$115 million more than a year ago but it's on limbo at present.

Mr. Wijesuriya told media that Dialog is ‘neutral’ on political uncertainty. "We are neutral of political uncertainty and will continue to invest," he said, adding that Dialog is aware of the country’s business and political landscape as they're supposed to know it. "This gives us confidence to continue our drive in investment, expansion and diversification."

He added that with the emergence of mobile applications such as Skype, WhatsApp and Viber, telcos need to strategise their business to benefit from the technoeconomic transformation and to redefine future growth. “To achieve this end, we’re going beyond our mobile connectivity services to other areas such as mobile internet products, digital TV and mobile data services,” he said. Last year Dialog invested around US$40 million and so far brought $1.7 billion into the country.