May 07, 2010 (LBO) – Plans by Sri Lanka’s telecommunications regulator to introduce mobile phone number portability, allowing subscribers to switch networks while using the same number, could threaten industry profitability, Fitch Ratings said. Implementation of Mobile Number Portability (MNP) could increase subscriber acquisition and retention costs within the industry, it said in a statement.
Fitch said it believes the threat from MNP to larger and more established operators is higher, including Sri Lanka Telecom and Dialog Telekom.
To limit further damage to the industry, formal tariff floors and strict laws that enforce healthy competition should precede MNP implementation, it said.
Last month, Sri Lanka’s Telecommunications Regulatory Commission (TRC) called for consultancy services to suggest ways to introduce mobile phone number portability.
“Severe price competition in the Sri Lankan mobile space since mid-2005 has significantly eroded the telecom operators’ profitability,” Fitch said.
“However, price-based competition has eased since 2009 given the operators’ weakened financial profiles, and an unofficial tariff floor implemented by the TRC.”
Hasira De Silva, Associate Director with Fitch’s Asia-Pacific