Rohan Samarajeewa, former head of Sri Lanka's Telecommunication Regulatory Commission (TRC), said that while there was no doubt that Bharti Airtel was committed to operating in Sri Lanka, it had altered its timetable and could well be scaling down its original investment plans.

The reasons for the delay in starting the operations were in the realm of speculation, Samarajeewa said. But he did point to a possibility of difficulties in getting frequencies from the TRC, as it is generally recognised that the allotment of frequencies tends to be "highly politicised" in Sri Lanka.

The parent company in India could also be changing its priorities as regards capital allocations, in the context of the growing challenges in the more lucrative Indian domestic market, Samarajeewa said.

"Even assuming that the mobile phone market in Sri Lanka is 10 million, it is still only the size of a metropolis in India. It is, therefore, possible that Bharti Airtel is looking at some of the Indian states with greater interest," he said.

In 2007, Bharti Airtel had set up a Sri Lankan subsidiary, Bharti Airtel Lanka Pvt Ltd., got a license to provide 2G and 3G services in collaboration with China's Huawei Technologies, announced an investment of $200 million and began to recruit a large staff.

The services were to begin by 2007 end. This subsequently got postponed to early 2008. But, as yet, there are no signs of an early start.

"When it announced its entry, I expected Bharti Airtel to literally slaughter the existing players. But given the recent changes in the price structure here, and the intense competition in the field, the Indian company will have to be quite creative if it is to be more than just a minor player," Samarajeewa said.

The market is small and crowded. The fixed line and mobile phone penetration in Sri Lanka is very high. 40 to 50 per cent of the households in the island (excluding the war-affected north and east) have access to a phone.

Out of a total population of 20 million, six million have mobile phones. With the recently announced price reductions, the user-base is expected to rise to 10 million, or half the total population of the country.

There are already four players in the field. Among them, Dialog Telekom, a unit of Telecom Malaysia, has been the leader, controlling 60 per cent of the market. Dialog has enjoyed brand loyalty for a considerable length of time throughout Sri Lanka, and is, therefore, no pushover.

Bharti Airtel would have to come up with innovative packages to attract the bottom rungs of the socio-economic ladder, an area of rapid growth in the foreseeable future, Samarajeewa pointed out. While price will be of the highest importance for those in the bottom-end of the social scale, technical qualities will be a clincher among the upper strata of society.

Asked for the reasons for the delay in starting operations, Bharti Airtel Lanka's CEO, Amali Nanayakkara, said her company had very stringent requirements with regard to the infrastructure and that it would not start operations until all the requirements were met.

But she denied that there were any difficulties in getting official clearances. The setting up of the network was also proceeding satisfactorily.

The company was "very happy" with the cooperation of the Sri Lankan authorities, and the pace of the work was also "very good", Nanayakkara said.

As for the price factor, she said that it was nothing new and was there right from the time they came," she said.