Sri Lanka: Sixth GSM operator licensed?

Posted on December 30, 2008 / 26 Comments

Board of Investment has granted approval to a sixth mobile/ 5th fixed operator.

The Board of Investment of Sri Lanka granted investment approval to a new mobile (GSM) and fixed (SCDMA) telecommunications network provider. Mr. Dhammika Perera, Chairman / Director General signed the agreement on behalf of the BOI and formally presented the BOI Certificate of Registration to Mr. B.A.C. Abeywardena, Director of RTEC Mobile Lanka.

FDI, which has been successfully attracted by the BOI has played a major role in the development and modernization of Sri Lanka’s telecommunication.
RTEC Mobile Lanka (Private) Limited signed the agreement to set up and operate a mobile and fixed telecommunications network. The venture is an investment of US $ 100 million sponsored by Global Electroteks Limited, UK. The project will create 320 new employment opportunities in high technology field.

26 Comments

Customer
December 30, 2008, 11:30 am
Welcome. Abeywardene has been an innovative man but hasn’t been able to hold on to one business for a long time. He pioneered many new technologies but gave way when new investors came in. Will this entrance be of the same.
Rohan Samarajiva
December 30, 2008, 2:08 pm
Pakistan auctioned the 5th and 6th GSM licenses for USD 291 million apiece. My recollection is that Bharti paid a USD 4 million fee when it was given the license. Why does the government not auction these scarce resources and licenses?
BP
December 30, 2008, 2:23 pm
Rohan – what are your views about a sixth mobile operator. The industry is already intensely competitive and is crowded with 5 operators for a small population of 20 million people. The TRCSL does not seem to have a clear policy on this. Moreover, there was no transparency on awarding this 6th license. What does that mean to investors?
Rohan Samarajiva
December 30, 2008, 3:01 pm
My views?

Do I know how many operators a market can support? No. To some Dialog’s license was one too many; but they were proven wrong. But the regulator had better start thinking about how to handle mergers and acquisitions and how to face an operator going out of business.

It is always a good thing to have a clear policy and live by it. At least in the case of Bharti, word was out that applications were being entertained and the license fee of USD 4m had been announced. Nothing like that here. This kind of thing increases market uncertainty and that is never a good thing.

Transparency? Which license in LK was transparently issued? Only ones were the WLLs in 1996 and the EGOs in 2003.

Big loss to public purse as a result, as I point out above. In PK, they got USD 291m x 2 for 5th and 6th mobile licenses. Then they charged the same from all others when they came up for renewal. Even if you can get 1/10th of that that would be serious money for the government. But no interest in making money this way; all they want is to tax the mobile user.
Raditha
December 30, 2008, 7:00 pm
More the merrier but how is anyone going to break into this cut throat market? It’s not often that you see competitors in an oligopoly competing on price as they mobile operators are doing here. That price competition is going to intensify when the 5th comes along.
Rohith
December 30, 2008, 9:19 pm
Rohan

I think that you have forgotten that Electroteks the parent Company managed by Abeywardana was the second telecom licensee of the country after Sri Lanka Telecom. Have you forgotten that his work in developing the first data com network in Sri Lanka as far back as in 1985 that paved the way for banking automation, introduction of ATMs, unibanking and all networking concepts, automating and distributing Colombo Stock Exchange operation from the centre to 15 brokers etc., finally paving the way for liberalization of the telecom industry by then government that gave a position to you also to head the institute established to oversea and regulate the most successful industry , the telecommunications. Don’t you think is it not his pioneering work when the rest of the world still trying to identify what is meant by deregulation that lead to such wonderful development that any one could be satisfied. I think still some energy is left with him to do wonders. Have you seen what happened the mighty Dialog and Sri Lanka Telecom and Singapore based LankaCom was given 200 locations each Nanasala locations to provide communication facilities. Do you know how many locations completed by this mighty combination. Less than 200 in 4 years. Abeywardana single handedly did 200 successfully.

Do not under estimate him , I hope that he together with patriotic Sri Lankans will take the industry back under his arm. He is so vicious and nationalistic and if he has finances he will take on the world as I heard that now he has developed the entire range of telecom products far better than many of established products in the market as I have seen once in an Exhibition in Sri Lanka. Sri Lankans worldwide through his Tv channel TV Lanka rallying around him to get the intruders out of the country.
Rohan Samarajiva
December 30, 2008, 9:24 pm
I expressed no views on Mr Abeywardena or his company. I merely spoke to the principles of market entry, a subject that I study and teach. Why is it that everything has to be personalized?
Chanuka Wattegama
December 31, 2008, 9:12 am
@Rohith,

Didn’t want to get in, but you tempted me by walking into my terrority. :-)

[quote]

Have you seen what happened the mighty Dialog and Sri Lanka Telecom and Singapore based LankaCom was given 200 locations each Nanasala locations to provide communication facilities. Do you know how many locations completed by this mighty combination. Less than 200 in 4 years. Abeywardana single handedly did 200 successfully.

[unquote]

Let us get the facts correct.

The first round was 100 Nenasalas. (not 200 – there weren’t 200 Nenasalas in early 2005) Connectivity was through VSAT links. Line of sight was from a point directly above. So almost any location could be connected. It was only a matter of installing a dish and renting a satellite channel.

The second round was about 500 Nenasalas. The links are terrestrial. (wireline or wireless) Some have faced problems of line of sight. (or distance) Yes, none of these three operators serve some remote areas.

The untold story is the comparative costs. In the first case, it was a Rs. 90 million deal, making it cost Rs. 75,000 (US$ 750 then) per month per link. Now it is Rs. 11,250 (US$ 100).

What do you expect? A US$ 750 solution has to be superior to a US$ 100 one.
Aqeel
January 1, 2009, 1:47 pm
Any How Airtel Will Be The Best

http://airtellanka.co.cc/
Ajth
January 1, 2009, 6:36 pm
What lies and rubbish going in this site
Ajth
January 1, 2009, 6:49 pm
I went through Rohan’s comments. What he said is correct. Why we do not charge the same amounts as in Pakistan. Then for 5th and 6th Mobile operators we would have charged US$ 438 Million. As Airtel has paid only 4 Million we must force the government to slap US$ 434 Million charge on Abeywardana’s Company to teach him a lesson and to make a deterent to any Sri Lankan who thinks in entering Sri Lankan telecom market which had all these days a play ground for beloved Malaysians, Swedens, Americans , Hongkong Chinese and recently Indians.

What transparency have in this banana republic.

This must be forwarded to SC too for allowing Abeywardana to act violating the fundamental rights of Malasians and Americans in Sri Lankla
Rohan Samarajiva
January 1, 2009, 7:19 pm
I cannot prevent distortion of what I said by people who either cannot understand what is being said or do not wish to understand, but I can explain for the benefit of others.

I did not, at any point or in any form, say that the 6th operator should be charged the same fees as charged in Pakistan and others not charged fees. In fact, I showed how in PK the license fee was set by the auction of the 5th and 6th licenses and then those same fees were charged from others at renewal.

In response to someone’s question, I said that pretty much all the licenses issued in Sri Lanka were issued non-transparently. That could be scored as being in favor of the new entrant.

I am explaining how licensing should be done; not making specific recommendations on what should be done about specific licenses in Sri Lanka.
harsha de silva
January 2, 2009, 2:09 pm
Unless there is transparency in any transaction those outside the transaction will never know the actual consideration. In the case of telecom licenses the accepted practice is to use competitive auctions. This is what was done in 1996 and 2003 as correctly pointed out by Rohan.

Now, according to the post, what the BOI has given RTEC Mobile is “investment approval” and not a license. The BOI’s official communique says inter alia that “The company has already obtained the required approval to operate from TRC (Telecommunications Regulatory Commission) and expects to commence commercial operations by December 2009.” The question is about this “approval”. Is it a license? When was it granted? Has spectrum been allocated? What was the consideration [given that Airtel is supposed to have paid USD4m]? What was the criteria for selection of RTEC? And many others.

The question is not about individual shareholders of companies in a market but about the principles of governance of these markets without which they become inefficient.
Rihab
January 2, 2009, 6:27 pm
Wow Elakiri Out going Full Free To 100 Pacakege
Rihab
January 2, 2009, 6:29 pm
Baaaaaay
To Hutch Tigo Mobitel Dialog Airtel
Abeytel
January 6, 2009, 2:59 pm
Folks, finally airtel is coming. so you can stop ranting there and can start it in this link. add bit of patriotism as well. “abeytel…. please come soonnnnnnn…..” type would do just fine.
RTECH Mobile
January 16, 2009, 10:57 am
Dear every one,

See Airtel came with a big sound but didn’t give much as every one expected. See how were their commercials, promotions but no free stuff other than incoming. Yes all the other operators also have incoming free. So it is much disapointment & deperation to the people who lefet big debts to the existing networks & hoping to go to Airtel. But they have to pay for minutes with this new operator. Also the advertised charges are only till 31st March thereafter Rs.2.50/= + tax.

So what’s next. Await for the next UK based operator where there will be a huge change taken place as not like Airtel did.
ozman
January 16, 2009, 10:07 pm
Im glad the regulator is doing any neccessary means to run sri lankas operator congettions, anyhow Airtel’s entrant didnt impress in terms of tarrifs, but There Pre-paid anyhow does look attractive. looking at that scheme its 2 Rupees at any given moment, Which is the cheapest in Prepaid revolution, with a 50 rupee fee added, which is the only downfall. anyhow looking toward the future I belive Airtel will have to provide much more than this to keep going, unless they keep the current tariff intact, The most revolutionary way Why People (the people of Sri Lanka) is so desperate in need of getting there connection is very much due to there marketing tacts, As into the famous Sharukh Khan saying Hello Sri Lanka has aroused many sri lankans to get them just for there satisfaction. anyhow Airtel’s Call Reception is not of so good quality as in there are some breakups, and when you ring a airtel number it rings like a hutch, which I belive they are doing some tactics to save money, EX: everytime i am on a call it says ciphering switched off, can anyone explain?

Thanks
ROSHAN
January 19, 2009, 4:48 pm
Hi Rtec,

hoping to join up with u as soon as the recruitments start…i have been marketing to the domestic & business sectors in sri lanka in the telecom industry for the past 8 years…and i know from A to Z of the operators and there movements throughout ! hoping to hear from you….
Nik
January 25, 2009, 1:29 am
Hi Harsha,

You are correct. What BOI has done is the final action which granted the facility for the investment.

But RTEC through its parent company has already secured the license 15 years ago, which is a fully facility based telecommunications system operator license as some one said here the second license after Sri Lanka Telecom.

So there is no need of RTEC to obtain a license or to pay license fee to operate a telecommunication network in Sri Lanka, which they have already done.

Late 2008, They have finally secured the spectrum on 1800 band. They currently owned 1 x 17.5MHz slot and 1 x 7.5MHz.

While the fact is, Airtel been still negotiating with TRC to get a payment plan for the spectrum allocated to them, RTEC has fully paid the total frequency charges upon his allocation.

So its all good news from RTEC point of view how they came through so far. Its just a matter of rolling out a good network and provide a competitive service to customers.

How ever TRC still got major task ahead, to make sure non of these operators wont go bankrupt over night due to continuos fall-down on their income.
Rohan Samarajiva
January 28, 2009, 10:14 pm
Word is out that RTEC is majority controlled by Reliance of India. Nothing wrong with it in my view, but the Indophobes are sure to be disappointed.
Lasantha
April 1, 2009, 7:39 pm
RTec!
Coming Soon…
We Are Waiting..
Want Network Coverage Radawana- 10 Mile post Area.
And I Would like to join with RTec.
Thanks!
mayooresan
April 14, 2009, 2:22 pm
I”m not sure about the profile of this company but most probably it’ll be another HUTCH!
AVS Seneviratne
April 24, 2009, 1:24 pm
my warmest welcome to RTEC Mobile Lanka (PVT) Ltd. come immediately…. and do a better job. RTEC can win if it adopts the different approach rather than others.

thanks
sixth pay commission
June 10, 2009, 12:46 pm
Anybody encouraging the mobile servie from the govt side.. I think everybody have a bad feeling that the mobile servie from the govt is not good as that of the private companies in the country.
Dil
October 26, 2013, 7:55 pm
RTEC! We Are Waiting For You