In almost all the market's Airtel entered in to, its strategy was to engage in a price war. It has been a global phenomenon and I see that it has been repeated in all the countries it has stepped in to. I was surprised to here that in Kenya all though all the operators slashed prices in anticipation of Airtel's entry, Safaricom the dominant player in the Kenyan market, after watching Airtel's strategy in its market decided to increase its prices recently. Its a phenomenal case, a behavior that's unheard of in the mobile industry. Its probably been the only commodity in the world which has been dropping prices over the years, but here is a strange case where the market leader decided to increase its price and strangely supposedly it didn't have any backlash from its loyal subscriber base. Anyway its stickiness is more to do with its success in mobile money and having a 70% market share, factors which gives the power to do what it has done.
So probably it might not be a good reference for the Sri Lankan players to increase the price. But what I always felt was that the operators got them immersed in a mutually hurting price war and in a position of no return as of now. In the Sri Lankan market in anticipation of Airtels entry, other big players slashed their prices. This lead to a huge decrease in the Average Revenue Per User ( ARPU) and the overall revenue of almost all the operators. In away it can be argued that it made the market stagnant.
This behavior has a lot of similarities to the classic game theory problem, Prisoner's Dillema you would see that, when two prisoners are interrogated individually, at the outset the most logical decision for each of them would be to betray each other. But that's not the most optimal solution for either of them. Sames applies to the mobile operators, they slashed prices in a deadly price war where either of the 'prisoners' benefit. But then as a consumer I wouldn't complain since the call charges do not go up like the diesel prices.