Mobile War

Oct 19, 2009 (LBO) – Fitch Ratings said the entry of Emirates Telecommunications Corporation (Etisalat) into Sri Lanka can further delay any prospects for recovery in the Sri Lankan telecom operators’ profitability. Millicom International Cellular SA last week sold its fully-owned subsidiary in Sri Lanka, Tigo, to Etisalat in a competitive bidding process.

Tigo is the third-largest mobile telephony operator in Sri Lanka with a market share of around 20 percent and a nationwide network footprint.

“Competition in the mobile space is already highly intense with five operators vying for market share,” Fitch Ratings said in a statement.

“Price competition has led to a rapid deterioration of tariffs over the last four years which has weakened profitability of the operators, especially in the wake of the licensing of India’s Bharti Airtel, which has a ‘BBB-‘ rating with a stable outlook, as the fifth mobile operator in 2007.

“There was some hope for consolidation in the market with several local mobile operators interested in Tigo, most notably Bharti Airtel, which Fitch believes would have benefitted most from Tigo’s wide network footprint.”

Etisalat is among the world’s fastest growing telecom