Small players to exit
Meanwhile, citing probably the only silver lining, Fitch said the budget proposals would hasten sector consolidation as two loss-making smaller operators could exit the market, leaving three remaining.
“Smaller, loss-making telcos including Hutchison Lanka and Bharti Airtel’s fully owned subsidiary, Airtel Lanka, may consider exiting the industry as most of their revenue is pre-paid,” Fitch said.
“We believe that market leaders Dialog and SLT could acquire the smaller operators to reduce price-based competition and consolidate spectrum assets,” the rating agency added.
Sri Lanka’s telco market is one of the most overcrowded markets in the world, with five mobile operators serving a population of 21 million.