nsb

Feb 19, 2017

Govt. promotes merges of Telcos to tackle overcapacity

Overcapacity in Sri Lanka’s telecommunications industry is to be tackled through acquisitions and mergers of weaker operators with strong operators to overcome the intensified competition eroding profitability, Telecommunications and Digital Infrastructure Minister Harin Fernando said.

This overcrowded mobile phone industry remains the key medium-term risk to telecom operators in the country.

Data tariffs could rise following consolidation, and this would slow the decline in profitability and prevent duplication of capex. The number of industry participants could fall to at least two or three from five; he told a media conference in Colombo.

Sri Lanka’s Telecommunication and Digital Infrastructure Minister Harin Fernando has revealed that the takeover of Cellco Hutchison Telecommunications Lanka (Hutch) by Mobitel, the cellular division of state-controlled Sri Lanka Telecommunications (SLT), will be concluded ‘shortly.’

Sri Lanka Telecom, the largest integrated operator’s, plan to acquire Hutchison Lanka is still to be finalized , he said adding that several Telecom firms like Etisalat Lanka- Airtel Lanka are continuing confirmatory business valuation and due diligence exploring the possibility of mergers.

Sri Lanka’s mobile industry is one of the most competitive markets in the region with five operators competing for a total addressable population of 21.7 million and the competition among the five operators, Dialog, Mobitel, Etisalat, Airtel and Hutch is expected to remain high in years ahead.

Minister Harin Fernando has revealed that the takeover of cellco Hutchison Telecommunications Lanka (Hutch) by Mobitel, the cellular division of state-controlled Sri Lanka Telecommunications (SLT), is yet to be finalized.

The deal – which is estimated to value the unit at between USD115 million and USD135 million – was agreed upon in February 2014, though disagreements over the purchase price were the reason behind the delay in regulatory clearance.

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