-Hans Wijeyasuriya and Dumindra Ratnayake on the Asian market and the bottom of the pyramid
Its not the financial crisis that has reduced profits in South Asia. Sri Lanka is a very good case study. This happened because policy makers did not understand the market. We have one too many operators.
Our base stations have too long payback times. This is because prices have gone below sustainable level. There is less and less elasticity in the market. In pre paid environment people only talk a limited amount of time. They dont expand usage as rates drop. In a high rate environment this does not happen because people would have ben constrained by high rates, reduction of rates when they are already low will only result in people saving excess. Taxes, in addition are also too high.
-Dumndra Ratnayake, Tigo, Sri Lanka
The price war in the asian region is a popular topic. In Sri Lanka, when things started going wrong in the last two years, the entire region should have looked at Sri Lanka and learned from our experience. The lower GDP south asian countries could have seen in Sri Lanka a crystal ball of what is going to happen. It sould have been even possible to extrapolate the Sri Lanka situation to the larger market and predict that elasticity in India would also start slowing down. Once you reach a certain penetration point and postulate it on the economic pyramid, any reduction in price will predictably cause reduced elasticity.
At this inelastic point of demand, consumers have the option of moving into other areas to spend their money, and i think this is what has happened.
-Hans Wijeyasuriya, Axiata, Malaysia
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