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If Airtel is quitting Sri Lanka, why?

So I was asked why Airtel was quitting Sri Lanka, the first foreign market they entered. Here is the summary of what I said.

Perhaps because it was its first foreign excursion, Airtel was very slow to roll out.

In May 2007 they signed an investment agreement. I commented then that the amount committed was too small for a rapid rollout. They actually started offering service in January 2009, well over 18 months after the license was issued. So it is not that I am saying in hindsight that slow rollout was the cause. I said it right at the beginning.

What this delay did was to allow the four well-established operators to shore up their defenses, lower their prices, etc.

The Indian press appears to ascribe Airtel’s departure to bad policy and regulatory treatment. There is little evidence to support this theory. They received a license for USD 4 million in 2007; invested too little too slowly to pose a credible threat in a saturated market; had unclear management structures and now appear to be blaming everyone except themselves. It was widely rumored that the sending-party-pays regime favorable to Airtel was imposed by Presidential fiat, not regulatory process.

I also said that it is doing the company no good to have these rumors floating around for so long. It demoralizes staff and pours cold water on growth. But this problem is actually the government’s fault. Sri Lanka, like many other countries in the region, does not have clear market exit rules. It is quite possible that Airtel has had to seek presidential help even to exit the market.

Even today, months after the rumors started, there is no firm news. Pity.

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