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UNCLAS SECTION 01 OF 02 COLOMBO 000102 
 
SIPDIS 
 
DEPARTMENT FOR SCA/INSB 
 
E.O. 12958: N/A 
TAGS: MV ECON PGOV EINV ECPS
SUBJECT: MALDIVIAN MOBILE TELECOMMUNICATIONS MARKET: IN 
NEED OF COMPETITION AND LOWER PRICES 
 
REF: NONE. 
 
COLOMBO 00000102  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY.  Telecommunications in the small island 
country of the Maldives is dominated by one company, which is 
partially state-owned, while the other competitor is a minor 
player. The dominant telecom company is abetted by a lack of 
a telecommunications law and a compliant competitor.  As a 
result of the lack of competition, the Maldives has very high 
telecommunications rates.  A third competitor could drive 
down rates, but no such champion has appeared on the horizon. 
 End Summary. 
 
CURRENT TELECOMMUNICATIONS MARKET 
 
¶2. (U)  Dhiraagu Telecom Maldives is the leading player in 
the Maldivian telecommunications sector.  The company 
controls 100 percent of the fixed-line network and between 
70-85 percent of the country's mobile network.  The company 
has been in existence for more than 20 years.  Cable and 
Wireless PLC owns 52 percent of Dhiraagu while the Government 
of the Maldives (GOM) owns the remaining 48 percent. 
According to Dhiraagu executives, the GOM plans to sell 30 
percent (of its 48 percent stake) in an Initial Public 
Offering (IPO) in summer 2010.  Dhiraagu's lone competitor in 
the mobile market is Wataniya Telecom Maldives, a 
Kuwaiti-owned entity.  Various sources place Wataniya's 
market share between 15-30 percent of the mobile Market.  By 
all definitions, however, Wataniya is a small fish in a small 
pond and the company does not represent a significant threat 
to Dhiraagu in the near-medium term. 
 
¶3. (U) Between Dhiraagu and Wataniya, there are currently 
more than 400,000 mobile subscribers nationwide.  This number 
is actually more than the total population of the country, as 
a number of subscribers maintain multiple hand-sets and/or 
SIMs.  Additionally, the Maldives welcome more than 700,000 
roaming users per year, mostly tourists who visit resort 
islands or come to Male on business.  Due to demand, Dhiraagu 
recently began offering Blackberry services through a 
user-agreement contract with Sri Lankan Dialog Mobile. 
Dhiraagu hopes this service will generate additional income 
via robust connection, roaming, and termination charges. 
 
¶4. (SBU) Despite Wataniya's entry into the Maldivian 
Telecommunications market in 2005, calling charges have not 
dropped.  Dhiraagu executives admit that calling rates are 
high compared to neighboring countries and roaming and 
termination charges are some of the highest in Asia. 
Dhiraagu contends that high rates are necessary in order to 
cover the costs of bringing reliable mobile and fixed-line 
connections to the widely dispersed atolls of the country. 
This argument does not seem logical, however, given that 
fixed-line infrastructure has not been upgraded in many years 
due to dwindling public demand and the cost of expanding and 
maintaining mobile networks can be more than covered with 
reasonable connection charges.  Dhiraagu also does not feel 
compelled to reduce calling and roaming rates because 
Wataniya has not instituted a low-fee billing scheme to 
attract customers.  In the near-term, customers will continue 
to live with costly calling services and expensive roaming 
charges. 
 
¶5. (SBU) While it would seem, given the small size and 
population of the Maldives, that the market is at capacity, 
the country could use another entry into the mobile market. 
The GOM has left open the possibility of adding another 
mobile carrier to the mix.  Dhiraagu executives do not 
believe there is room for a third operator although Wataniya 
believes that the market could be an open playing field. 
Profitability is an issue. Between its fixed and mobile line 
businesses, Dhiraagu continues to turn a profit.  Wataniya 
has yet to turn a profit although it is approaching the 
break-even point in FY2010.  The profitability factor may 
force other companies to look hard at making an entry into 
the Maldivian market.  On the other hand, the Maldives could 
be an enticing location for major international player who 
might attempt to expand their brand regionally.  In that 
 
COLOMBO 00000102  002 OF 002 
 
 
case, it would matter less whether their operation in the 
Maldives was profitable and more on branding and obtaining 
regional name recognition.  In the near-term, however, there 
are few foreign operators interested in entering the 
Maldivian telecom market. 
 
NO TELECOMMUNICATIONS LAW 
 
¶6. (SBU) Despite the existence of a robust mobile telecom 
market in the Maldives, the country does not yet have a 
telecommunications law.  A draft law is with the Maldivian 
Majlis (Parliament) for debate, although there is no timeline 
for its passage.  In the absence of specific law, the GOM 
uses an informal regulator to oversee the sector.  According 
to Dhiraagu, the regulator is transparent and involved with 
the affairs of the sector.  This theoretically ensures that 
neither Dhiraagu or Wataniya enters into predatory practices 
or collude with one another.  In practice, the mobile market 
remains not overly customer friendly, which puts into 
question how much the regulator is involved with the public. 
The regulator has instituted a regulation that  ensures that 
both Dhiraagu and Wataniya share their towers on various 
resort islands or population centers.  This reduces the 
potential blight of massive mobile towers on the skyline. 
 
¶7.  (SBU) COMMENT:  At least for customers, the Maldives is 
an expensive proposition.  The country could use a third 
mobile telecom provider, which would ideally drive prices 
towards reasonable levels for consumers and ensure robust 
competition in the market.  Unfortunately, there do not seem 
to be any changes on the horizon.  Business as usual will be 
the rule of the day.  While Wataniya is a major international 
telecom player, it seems content to maintain its 15-30 
percent of the market and not make waves for Dhiraagu.  This 
approach places no pressure on Dhiraagu to reduce rates or 
become more customer-friendly.  Passage of a 
telecommunications law may change the status quo, though this 
remains to be seen.  Over the medium term, customers will 
have to put up with whatever Dhiraagu and, to a lesser 
extent Wataniya, have to offer. END COMMENT. 
FOWLER