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The Telecommunications Regulatory Commission on Thursday fixed a floor price of two Sri Lankan rupees per minute for outgoing calls on mobile networks, after two years of stiff competition plunged the industry into massive losses.

The regulator said mobile phone operators reported a combined loss of Rs 23 billion in 2009, for the first time since cellular phones were introduced to Sri Lanka in 1989.

Airtel, the fifth entrant in Sri Lanka’s five-player mobile market, believes the floor price was against consumer interest, its corporate communications chief Yohan Munaweera said.

Petitioning the Supreme Court on Friday, Airtel said a floor price “will only help the market leader and maintain the status quo at the expense of the consumer.”

Prior to the watchdog’s ruling on Thursday, the cost of making mobile phone calls had fallen to 25 Sri Lankan cents per minute, the regulator said.

In its petition, Airtel, which began operations in January 2009, said unless a new player offered cheaper call rates “any newcomer will not be able to attract subscribers.”

Besides Airtel, the island’s 15-million user mobile market is mainly shared between Malaysia’s Dialog Axiata, Dubai’s Etisalat, Mobitel Lanka and Hong Kong’s Hutchison Whampoa.

The telecom regulator, Anusha Palpita, was not immediately available for comment, but he told AFP last Thursday that losses made it difficult for mobile operators to invest in new technologies to expand their network.

Regional technology think-tank LIRNEasia said while a floor price could steady cashflows, the absence of a competition regulator had forced the government to step in.

Virgin hopes these tie-ups with ‘youthful’ brands will increase its reach to the younger generation by participating in their lifestyle. “The idea is to connect with the youth and be a part of brands that they identify with. If you look at the telecom market now, there is no compelling reason why a customer should stay with an operator. If Virgin also gives the standard telecom offerings, we will not be able to retain a customer. The idea of this is to go beyond the same old telecom tariff offerings and create a brand value and brand loyalty,” said a top official from Virgin Mobile.

The company is looking to target the age group of 16-26. The entire marketing exercise could cost between Rs 150-200 crore, sources say. However, this spend will not be made by Virgin alone and contribution to these co-branding initiatives will come from the brands it associates itself with. Sources say this initiative is designed to help both Virgin and the other brands involved, to get mutual mileage.

Virgin Mobile has a brand franchise with Tata Teleservices which has around 11 per cent market share in the Indian telecom market. According to the marketing alliance, the company uses Tata’s spectrum to offer its services branded under the Virgin name, exclusively to the younger generation of users. It currently operates across 14 circles like Mumbai, Maharashtra, UP, Punjab and Haryana.

The company had earlier claimed it planned to acquire 10 per cent market share among the youth. It offers both GSM and CDMA services and offers innovative schemes like where every consumer gets 10 paise credit for an incoming call.

Virgin Mobile operates in the UK, United States, Australia, Canada, France, Qatar and South Africa. Like in India, the company restricts its activity to branding initiatives only.

Apart from mobile branding, the group which calls itself a branding venture capital organisation, has interests in aviation, music, games, and even consumer goods.

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