Dialog Telekom Limited is Sri Lanka's largest mobile network operator and telecommunications company. It operates Dialog GSM, the country's largest mobile network, as well as Sri Lanka's leading internet service provider, Dialog Internet. Dialog has spearheaded advancements in Sri Lankan mobile technology, launching services such as GPRS and MMS earlier than other regional networks. The company prides itself on innovation as well as its customer service infrastructure and community development initiatives. Dialog's vision is to be the undisputed leader in multi-sensory connectivity that empowers and enriches lives and enterprises in Sri Lanka.

1. Dialog telekom limited
Dialog Telekom Limited:Leader in Mobile Telecommunication
Organizational Back ground
Dialog Telekom, Sri Lanka's flagship Telecommunications Company operates Dialog GSM, the country's
largest mobile phone network, and is a Subsidiary of the Axita Malaysia Group. The company is also a
key player in the Internet Service Provision Market with its state of the art ISP, Dialog Internet, and also
operates Dialog SAT, the country's pioneer Mobile Satellite Service Provider. Following an aggressive
entry in to the International Services Market, Dialog Global has established itself as a premier provider of
International Services in Sri Lanka
As espoused in its signature, "The Future Today", the company prides itself in its commitment to, and
achievement trail in, Research, Development and New Technology introduction. Dialog GSM has the
distinction of placing Sri Lanka as the first in the country in the region and among the first 40 countries in
the world to support High Speed Packet Based Mobile Data Services with the launch of GPRS (General
Packet Radio Service) in 2001. GPRS - a key element of 2.5G GSM, is a major step towards 3G (3rd
Generation) technology, offering higher data speeds, packet based data communications and end to end
IP (Internet Protocol) based connectivity. Dialog GSM extended its regional leadership in mobile
technology with the introduction of Multi-Media Messaging (MMS) in 2002 placing itself among the first 35
networks in the world to support this break through mobile telecommunications technology, enabling the
exchange of multi-media content between mobile phones and even to/from the Internet.
In addition to the above cutting edge service developments, the company was instrumental in extending
the scope of mobile telephony to mobile data and a host of value added applications within the first few
years of its operation. Mobile Banking, mobile email, Information on Demand services, interactive Short
Messaging services for entertainment as well as business applications were some of the Value Added
Services (VAS) which were in commercial operation in 1998 well ahead of regional networks. The
company's thrust towards the expansion of its portfolio of services continues with relentless momentum,
the most recent additions being the Mobile-Wallet a state of the art mobile commerce application enabling
secure payment for a wide range of products and services via a mobile phone and location based
services. The network also provides a range of Voice Portal Services providing voice based
entertainment services ranging from Sports news and greetings to the registration for medical
appointments.
The company prides itself in a customer servicing infrastructure which is unrivalled by any other service
provider in the country. Powered by a dedicated staff of over 150 service professionals, the company
provides 24x7 support for all its services to its customers. With the recent launch of its state of the art
contact centre, billed as a flagship installation in Sri Lanka, Dialog's service agents are available round
the clock via person to person interaction, web based chat and/or email to support the company's ever
increasing customer base.
The company believes in, and attributes its success to, the skills, dynamism and bountiful potential of the
people of Sri Lanka. Through the years during which the company grew to being a hall mark for Sri
Lankan technology excellence on the global mobile telecommunications map, it has also worked
aggressively towards developing the potential of several segments of the community. Centered on its
CHANGE - "Transforming Their Future Today" programme, a wide variety of community development
initiatives have been initiated by the company, ranging from support for nationally recognised initiatives

2. directed at uplifting the Hearing and Speech impaired, the Disabled and the nation's Children, through to
the sponsorship of sports enabling Sri Lankan talent to be showcased on the international stage.
The company's research and development efforts have also been directed at the use of mobile
communications technology for the benefit of the community. The company has been recognised as a
world leader in this respect and has the distinction of being the only operator in the world to win 3 GSM
World Awards (from the world GSM body) for its innovations in the use of wireless technology. The last of
these awards was won for the company's unique SMS based Blood Donation network established in
collaboration with the National Blood Transfusion
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History
Dialog GSM has spearheaded the mobile industry in Sri Lanka since the late 90's propelling it to a level of
technology on par with the developed world. The company operates a 2.5G GSM network, supporting the
very latest in multimedia and mobile Internet services, and also provides International Roaming facilities
in over 100 countries. Dialog GSM is the country's largest cellular network providing services to over half
a million customers (as of 2002) across all nine provinces of the island.
The relentless pursuit of excellence in high technology service provision earned the company the
distinction of being the first Telecommunications operator in South Asia to receive ISO 9001 certification.
The Commitment of the company to excellence in business practices led to the winning of the National
Quality Award (Large Scale Service Category) in 2001, followed closely by International recognition in the
form of the (Malcolm Baldridge) Asia Pacific Quality Award in 2002.
The company has pursued a strategy of broadening its portfolio of telecommunications services and in
1999 launched Dialog Internet a fully fledged ISP connected through to the Internet Backbone of Telekom
Malaysia within the Multi Media Super Corridor in Cyber Jaya.
The company has pioneered a new dimension in mobile telephony in 2002, through the launch of Satellite
Mobile Telephony Services under the brand name of Dialog SAT. Dialog SAT brings with it the extensive
coverage of the Thuraya Satellite Mobile Telephony Services, now available throughout the length and
breadth of Sri Lanka and reaching 3.2 billion people in 99 countries across 3 continents.
The liberalisation of the International Telecommunications market in 2003 provided an opportunity for the
company to launch its latest power brand - Dialog Global, a forerunner in the International Services
market. With robust linkages in to the Global network of Telekom Malaysia Bhd., the company has added
a new dimension in International Service provisioning in the country with the commissioning of a state of
the art gateway infrastructure providing access across the globe for retail, wholesale and Private Network
services.
Industry Background
Fundamental economics describes that in order to grow you need investments and in order to invest you
need to save. However a popular trend in developing countries is to depend on foreign investment for
growth. In a way this is a positive approach since the developing countries can improve their balance of
payment problems through exports and consumers can benefit from high quality products and services

3. offered at comparatively low prices due to cheap labour in developing countries. Hence economies are
shaped by policies like tariff lowering, devaluation of currency, unification of exchange rates and removal
of import export restrictions. These trends have brought fundamental changes in service oriented
industries such as Telecommunication, globally. Human capital development, technology transfer and
increased international trade are some positive impacts of foreign investments on the industry.
The terrorist activities prevailing in the country though is a key decisive factor, has been constant for the
past twenty years. The exchange rate has decreased from Rs 50 per US dollar a decade ago to, Rs 108
per US dollar. Nevertheless this was a result of a gradual process, not a result of a crisis. Hence arguably
these were not key decisive factors in the investment patterns (Rohan, 2005).
The privatisation programs that were launched by the Sri Lankan government to attract foreign
investment were a trial and error type approach. Significantly the partial liberalisation of the
telecommunication industry became the ground breaking transformation in this process (Asoka, 2006). In
1980 the government split the then tightly coupled posts and telecommunication services into two
departments. As a result the Department of Telecommunication was formulated. By 1989, nine years
after the industry was recognised as a separate entity the first private investment materialised when
Celltel a private mobile operator entered the market. In 1991 the department was transformed into a
corporation naming it as Sri Lanka Telecom (SLT) through the enacting of the Sri Lanka
Telecommunications Act No. 25 of 1991. The act separated policies, operations and regulation and
assigned responsibilities to the ministry, SLT and Sri Lanka Telecommunications Authority (STA), the
regulator respectively. This was a major mile stone in the liberalization process after the initiation in
1980s. However STA did not have the independence, power, structure, resources or accountability and
was performing unsatisfactorily. Hence, the Sri Lanka Telecommunications Act No. 27 of 1996 converted
STA into Telecommunications Regulatory Commission of Sri Lanka (TRCSL).
In 1997, SLT was partially privatised by sale of a 35% stake to NTT of Japan and Sri Lanka Telecom Ltd
(SLTL) was formalised. Exhibit 1 displays investment details from 1993 to 2005. TRCSL has became the
sole body to inquire into matters related to telecommunications industry in Sri Lanka. While protecting and
promoting the interests of consumers, purchasers and other users, TRCSL maintains and promote
effective competition within the industry. It also promotes research and development activities for the
industry in order to make Sri Lanka the hub for international transit services in the region.
The reforms were not solely initiated by the government but mainly imposed by the World Bank and
International Monitory Fund through structural adjustment programs as conditions for support.
International organisations such as World Trade Organisation and International Telecommunication Union
stimulate the telecommunication industry liberalisation.
During the reign of government monopoly, investments in the industry was driven by government
decisions on how much revenue the state owned institute can reinvest and on the nature and extent of
foreign credit and aid facility. With the adoption of competition-oriented regulations during mid 90's over
government funded investments there have been positive indicators of a more natural market. For
example in 2002, investments by private operators exceeded that of SLTL for the first time indicating the
start of a normal market-based industry. Since 1991 the teledensity (number of telephones per 100
persons) for both fixed and mobile sectors has increased (fixed lines from 0.7 in 1991 to 5.1 in 2004 and
of mobile phones from 0.1 in 1991 to 11.4 in 2004). Exhibit 2 displays the annual growth in the industry.
Exhibit 3 describes the turnover from 1994 to 2005. The turnover for mobile operators comprises of
income received from rental income, interconnection revenue, value added services, other service

4. income, and sale of handsets. The turnover for fixed line operators comprise of income received from
sources such as, rental income, domestic call revenue, receipts from other network operators-domestic
(interconnection) and international, Telex, data transmission and other telephony services.
Sri Lanka compared to its neighbouring countries has many advantages apart from most favourable
policies towards foreign investors. Factors include better social conditions (high literacy rate, low infant
mortality rate and long life expectancy), strategic location and an educated and trainable work force.
However, in comparison Sri Lanka has not attracted significant private investments into the sector. Sri
Lanka despite its many advantages and early opening up of the economy is lagging behind India, which
had followed relatively closed economic policies until recent but after mid 90s has aggressively attracted
and dominated foreign investments.
Some of the reasons for slow growth can be aggregated to decisions taken by TRCSL. The fixed line
private operators were restricted to wireless operations putting the wire-line exclusivity on SLT and the
operations of international telephone services were solely vested on SLT. The tariff rebalancing
permission, given to SLT at privatization for five consecutive years added the situation to a further
deterioration by the regulator. However, competition in the mobile sector is positive for a number of
reasons such as, competition among operators, affordable initial price (prepaid systems), constant
improvements in mobile phone technology, quick supply, expansion of coverage, declining number of
public payphones, shortage of fixed line supply, opening up of new market segments (war-torn areas) due
to peace building efforts etc. However, quality of mobile services in Sri Lanka appears to be low because
some operators have been insufficiently capitalized to maintain network capacity in the face of rapid
demand (Asoka, 2006). Again discriminatory type responses by TRCSL have led to slow growth in the
sector. For example LankaBell's request to utilise CDMA technology was approved only in 2002 after a
long hold. Suntel faced a similar problem and they were allowed to use the technology only in 2004.
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Vision
To be the undisputed leader in the provision of multi-sensory connectivity resulting always, in the
empowerment and enrichment of Sri Lankan Lives and Enterprises.
Mission
"To lead in the provision of technology enabled connectivity touching multiple human sensors and
faculties, through committed adherence to customer driven, responsive and flexible business processes,
and through the delivery of quality service and leading edge technology unparalleled by any other,
spurred by an empowered set of dedicated individuals who are driven by an irrepressible desire to work
as one towards a common goal in the truest sense of team spirit."
Corporate Values
Total commitment to our customers
Dynamic & human centered leadership
Commitment to task & team work
Uncompromising integrity
Professionalism and accountability

5. Foremost concern for respect & care
Organizational Goals
The deliverance of industry best return on investment to the shareholders of the company, and
financial market recognition as the highest valued mobile communication operator in Sri Lanka.
The deliverance of the best product in the market place through leadership in customer service,
product quality, provision and adaptation to emerging technologies and convergence with the
internet.
Achievement of leadership in terms of (economically) effective subscriber base, brand recognition,
consumer first choice and ownership of heart and mind share of Sri Lankan consumers
The achievement of leadership in term of management practices, internal strengths, competitive
resilience and quality of empowered resources, through adaptation of best practices and the active
pursuit in new business in which corporate strengths could be exploited in the interest of growing
the value of the company
Culture
Dialog Telekom Organization culture can be summarized as a performance-driven culture, where good
work result in more work and more rewards and benefits.
Organizational Structure
The operations of the Company are managed through a faculty of Strategic Management Committees
(SMC), focused on the delivering of corporate targets within the core functional areas of Service
Delivering, Technology, Business and Finance, Information System, Sales Marketing and Support
Services.
The primary role of an SMC is to provide strategic and operational leadership in all functions of the
Company.
Board Of Directors
Non - Executive Director/Chairman
Executive Director/Chief Executive
Non - Executive Director
Independent Non - Executive Director
Non - Executive Director
Non - Executive Director
Independent Non - Executive Director
Senior Management
Director / Chief Executive
Chief Financial Officer
General Manager - Engineering, Planning and Development
General Manager - Corporate Planning, Quality Systems, Corporate Development, Management
Information Systems and Enterprise Risk Management
General Manager - Engineering Operations and Information Technology
General Manager - Legal, Regulatory Affairs, Administration and International Business / Company
Secretary
General Manager - Sales and Marketing
Head - Network Operations and Fundamental Network Coordination
Head - Customer Service

6. Head - Human Resources Management and Development
Head - Network Planning
Head - Corporate Finance and Internet Business
Head - Information Technology
Head - Corporate Planning and Quality Management
Products & Services
Dialog Telekom product and services are distributed across the following business areas;
Mobile
Dialog entered in to Sri Lankan market as the first GSM (2G) operator of South Asia and currently they
have launched the 3G Technology again as the first operator in the South Asian region.
As a GSM Operator apart from Call Origination and Termination, Dialog provides various value added
services for it's customers.
Call Diversion
Call Conferencing
Missed Call Alert
Call Hold
Call Waiting
Voice Mail
CLI
IDD
Roaming
SMS
Star call
In addition as referred in the following diagram, Dialogs mobile telephony portfolio tries to make a right
balance between prices against provided products and services.
ISP
Dialog Internet was launched in 2001, In addition to act as a Internet Service provider, Dialog provides
services in the following areas using their ISP backbone.
GPRS (mainly an enhancer of the core GSM service Dialog Offers)
WiFi Solutions.
Web Billing.
Global
Dialog acts as a global operator providing the following services to the global market.
International call Terminating.
International call Originating.
Transferring (switching)
Global IPLC.
Broadband
After acquiring Dialog Broadband (Pvt) Ltd. formerly known as MTT, Dialog received the ability to work as
a transmission and communication operator. This enabled them to provide customer specific voice, data
and video solutions using their country wide transmission backbone.
Dialog SAT

7. Dialog SAT technology provides access disregarding the location and this was implemented as an
integration of Thuraya and Dialog Technologies.
Rewards Programs
Dialog Telekom supports a comprehensive portfolio of customer rewards programs focused on rewarding
customers for loyalty and continued usage of Dialog Telekom services. Based on the wide spectrum of
consumer segments addressed by the Company, several rewards/loyalty programs have been designed
with specific focus on key segments.
Star Point scheme
Club Vision/Priority customer
Nexus Points
Operations
Coporate Social Resposibilities
Corporate Social Responsibility (CSR) is a culture by itself for Dialog Telekom that drives them on
visioning to empower all Sri Lankans equitably, integrating resources, values and ethics across economic,
social, cultural and traditional boundaries. It is integral part of their business in whatever they do, plan and
believe. Their CSR initiatives are applied within a local context, which implies that they balance their core
business case with community needs. They also embed CSR across fundamental business processes
internally and as well as external project oriented CSR such as Social Investments and the Company
Change Trust Fund initiatives.
There are four dimensions of strategic CSR thrust at Dialog Telekom to which all these CSR initiatives
can be categorized into.
Business Integral CSR which challenges Dialog Telekom to integrate CSR in business planning
and decision making.
Corporate Philanthropy which is channeled through the Change Trust Fund
Action Oriented CSR which spans within local communities in times of need and disaster.
Technology for CSR to create services and products with high social value
There are so many successful and effective CSR projects that have been initiated by Dialog Telekom.
Few of those are;
The first ever research lab for Telecommunication Technologies Research opened at the
University of Moratuwa, named as Dialog - University of Moratuwa Research Laboratory.
The Disaster Management Centre, together with Dialog Telekom Limited, is currently piloting Sri
Lanka's first mass alert early warning system. The Disaster and Emergency Warning Network
(DEWN) uses GSM communication technologies and devices, and transmits alerts through the
GSM network. It can be used to issue customized alerts to selected recipients instantaneously,
and is compliant with the internationally accepted alerting protocol - CAP.
Dialog Telekom Limited has identified a great opportunity to use its infrastructure and core
competencies to bridge the divide in level of education between the urban and rural areas. As an
entirely non-commercial exercise Dialog partnered with the Ministry of Education to build the Digital
Bridge. The Digital Bridge enables lectures conducted at a central location to be transmitted live to
remote schools, and for the teachers and students to interact, creating a virtual classroom. A
teaching studio has been established at the ministry specifically for the purpose.
The Dialog scholarship program go beyond the short-term gain to develop the intellectual capital of
Sri Lanka's future leaders. they support interaction between the scholars and their employees,

8. which facilitates mentoring, internships and soft skills development to prepare these scholars for a
position of community leadership and service.
Few awards that Dialog Telekom has received in recognition of the CSR initiatives are;
GSM World Award 2001
2001 GSM World Award for the idea behind the Change Trust Fund initiative, a unique system where
Dialog post-paid customers are given the opportunity to donate half a percent (0.5%) of their monthly bill
up to a maximum of SLRs. 25/= with the company matching the contribution, which would be used for
charity.
GSM World Award 2002
2002 GSM in the Community Award on Wireless Accessibility for SMS 112, a SMS based emergency call
facility for the hearing and speech impaired.
GSM World Award 2003
2003 GSM in the Community Award on Best Use of Wireless in Emergency Situations for Dialog's blood
appeal, matching and donor management system
Reference
RohanSamarajiva&AnupamaDokeniya with Sabina Fernando, Shan Manikkalingam&AmalSanderatne
(2005). Regulation and Investment: Sri Lanka Case Study (Report on the World Dialog on Regulation)
Asoka Fernando (2006). Regulation and FDI: Sri Lankan Telecommunications Industry
Case Analysis
Dialog Telekom Limited
Executive Summary
This is a case analysis for Dialog Telekom Limited, the Premier Mobile Telecommunication Company in
Sri Lanka, based on the strategic management perspective.
It starts by giving a basic overview of Dialog Telecom Limited, its operations and performance. Then the
internal environment analysis gives a view of its resources, structure and processes while financial
analysis included in the same shows the current standing of the company in terms of financials. Next the
external environment of Dialog Telkom has been analyzed based on PESTEL factors and Five Forces
Model. All these are used to perform the SWOT analysis to derive strategies to be developed to suit
Dialog Telekom's environments keeping alive its objectives.
Finally all levels of strategies have been recommended together with programs required to implement
those. It also includes evaluation steps required to assess the success of strategy implementation in
Dialog Telekom and how controlling can take place.
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Introduction
Dialog Telekom Limited is the largest mobile operator in Sri Lanka with over 3 Million subscribers
representing over 60% market share in the mobile communication sector. Dialog Telekom is also the
largest listed company on the Colombo Stock Exchange in terms of Market Capitalization with a market
capitalization (as of 30 September 2006) of SL Rs 161 Billion.

9. Dialog Telekom Limited is a subsidiary of Telekom Malaysia International and a member of the Telekom
Malaysia Group. In addition to its core mobile telephony business, the company provides international
services, supporting an International Gateway infrastructure providing retail and wholesale international
voice and data services under the brand name of Dialog Global. The company also provides Internet
services through
Dialog Internet - a fully-fledged Internet Service Provider (ISP). Dialog Telekom also operates Dialog
SAT, a mobile satellite service.
Dialog Telekom has clearly defined vision, mission, corporate values and goals as given below.
Vision
To be the undisputed leader in the provision of multi-sensory connectivity resulting always, in the
empowerment and enrichment of Sri Lankan Lives and Enterprises
Mission
To lead in the provision of technology enabled connectivity touching multiple human sensors and
faculties, through committed adherence to customer driven, responsive and flexible business processes,
and through the delivery of quality service and leading edge technology unparalleled by any other,
spurred by an empowered set of dedicated individuals who are driven by an irrepressible desire to work
as one towards a common goal in the truest sense of team spirit
Corporate Values
Total commitment to our customers
Dynamic & human centered leadership
Commitment to task & team work
Uncompromising integrity
Professionalism and accountability
Foremost concern for respect & care
Organization Goals
The deliverance of industry best return on investment to the shareholders of the company, and
financial market recognition as the highest valued mobile communication operator in Sri Lanka.
The deliverance of the best product in the market place through leadership in customer service,
product quality, provision and adaptation to emerging technologies and convergence with the
internet.
Achievement of leadership in terms of (economically) effective subscriber base, brand recognition,
consumer first choice and ownership of heart and mind share of Sri Lankan consumers
The achievement of leadership in term of management practices, internal strengths, competitive
resilience and quality of empowered resources, through adaptation of best practices and the active
pursuit in new business in which corporate strengths could be exploited in the interest of growing
the value of the company
some more needed to be added
Internal Environment Analysis
7S model has been used as a primary tool to analyse the internal environment
Strategy
Dialog strategies are visible in the company's corporate, business and functional levels. They have
already diversified their business across many areas during the last few years. For instance, by acquiring
MTT, Dialog managed to strengthen it's transmission backbone. Also recent past it has acquired

10. CBNSAT, a sattelite TV transmission company, and DERANA TV Channel with along term objective of a
value chain convergence. In addition to reach the customer, Dialog has created many alliances with other
business corporations. Cargills-Dialog alliance to allow Cargills customers to settle Dialog bills is just one
such example.
The business plan is formulated at the beginning of the year considering main objectives of the company.
The progress of each project is monitored in a monthly basis through different strategic committee
meetings.
On the other hand, Dialog tries to introduce latest technologies into the market considering global mega
trends (refer diagram) through it's comprehensive Research & Development wing.
Among them, the Dialogs initiative to setup the Dialog Research Lab at the University of Moratuwa is of
importance, because it effectively enabled Dialog to provide tailor made solutions to the local market.
Nokia phones with Sinhala language support and Tsunami warning system for mobiles are just to name a
few such examples. These technology initiatives can be considered as a strategy used to capture the
market by effectively saying ahead from the competition in the technology and innovation sphere.
Structure
The Company's business and operations are managed under the supervision of the Board of Directors
comprising of five (5) non executive directors and one (1) executive director. The Board has the power to
appoint executive directors including the CEO. Divisional structure can be identified in company level but
performances of the divisions are measured through different strategic committees.
Systems
Apart from the technical back bone, Dialog uses several systems to execute their business strategies
successfully. For instance;
SAP ERP (Enterprise Resource Planning) - This was launched in 2006 January to integrate
identified key process in the company .
CCBS (Customer Care Billing system) - Currently existing billing system is going to be migrated in
to a new system to provide more customer centric services.
HRIS - Used for human resource management and all the day to day functions are carried out
through this system.
Style
The management style always depends on targets and objectives. Strict deadlines are imposed while
performance and progress are very closely monitored at all levels of the organizational structure.
Rewards and benefits schemes are in line for the top performers and better achievements.
All the employees will have a number of recreational opportunities such as trips, get-together, sports...etc
to take some time off from busy work schedules.
Staff
The Company currently employs a workforce of 2500 who in turn are considered pivotal to the
organization's growth and success. Annual manpower planning and recruitment is carried out in parallel
with the business plan preparation. The capabilities required by potential employees are based on the
requirements of the business plans applicable to respective departments of the Company in any given
year. Recruitment to the Company is governed by several policies. The core policy on filling vacancies
spells out the Company's intention to attract the best with the aim of exploiting the individual's potential
while providing career development opportunities irrespective of communal or gender differences. Seven
percent (7%) of the total HR cost is devoted to training and development. The training needs for

11. individuals and teams are identified from the competency requirements arising from the Company's
business plan and employees' annual performance review.
Superordinate Goals
All individuals with different backgrounds, different ethnics and nations are teamed up and driven towards
a common set of goals and objectives at Dialog Telekom. The company has been successful in focusing
the entire team towards a single vision by incorporating all individuals' goals and personal objectives
together.
Skills
Dialog team consists of number of individuals with distinctive capabilities and competences from top to
bottom. Dialog is proud to have a very energetic and talented CEO in the caliber of Dr Hans Wijesuriya. In
addition to that Dialog is served by a team of top class individual in the Sri Lankan Industry with lot of
talent and exposures.
Financial Analysis
External Environment Analysis
PESTEL
Political
Sri Lanka has very positive foreign investment policies. However, though Sri Lanka identified importance
of liberalisation early as in 1977, due to political direct intervention, bureaucratic attitudes inherited from
colonial reign and poor governance, the country as a whole and specifically the industry has not grown as
it was foreseen at the time of liberalisation. During the past two decades, terrorist activities have
remained constant as well.
Economical
Unstable macro economic environment and trade policy regime has a negative impact on the industry.
The fall of the exchange rate over the years happened on a gradual pace.
Since the inception of liberalisation policy it has undergone massive reforms in this sector. However Sri
Lanka lags dynamics incorporated by India to attract foreign direct investments. The attitude towards
foreign direct investments needs to be improved.
Socio-Cultural
Sri Lanka has better social conditions for example, literacy rate is high, infant mortality rate is low and life
expectancy is long. The country also has an educated and trainable work force.
Nevertheless Sri Lankans inherit a bureaucratic attitude from the colonial administration that results in
inefficiencies and discrimination.
Technological
Sri Lanka depends on technology transfers from foreign direct investments. However TRCSL encourages
local research and development.
The country comparatively has not performed well enough to adapt technological changes on a timely
manner. For example the shift from analogue to digital and the adoption of CDMA technology
materialised in a slow pace.
Ecological
Legal
TRCSL, the regulatory body takes up multidimensional roles. It ensures fair enforcement of Government
policy, hold operators accountable for performance, address consumer issues, monitor changing industry
needs, and provide feedback to the policy making units.

12. However TRCSL has been criticised over the years for information asymmetry, inefficiency and
discrimination.
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Five forces
Threat of New Entrants
The most awaited fifth mobile operator license for Sri Lanka has been awarded to AIRTELL, India's
largest mobile operator. With this the threat of competition increases. However as per TRCSL there will
not be any further licenses issued which creates an entry barrier for any others to the market.
Bargaining Power of Buyers
In Sri Lanka buyers/customers are not strong as compared to customers in Western countries. The
number of customer groups to protect themselves is almost non-existing in the Sri Lankan context. This is
quite evident from the demanding nature of customers in the Western countries. Hence quality, standards
and support are comparatively not major concern if they exist to a basic level.
However people are very cost conscious, as such when switching costs are fewer, buyers tends to go for
the lowest rates. As there are four other operators and switching cost is negligible, bargaining power of
buyers will increase. But with the increasing number of Value Added Services (VAS) provided by Dialog
Telekom, they are able to keep certain segment of buyers tied to them.
Threat from Substitutes
In strict Mobile Telecommunication sense there is no substitute technologies like VOIP over wireless
which is popular here in Sri Lanka. However in general, fixed line communication operators (SLT,
Suntel&Lankabell) create the substitution effect, particularly with the award of CDMA licenses.
SLT, Lankabell and Suntel are the substitute telecommunication providers which one can go for if he/she
is looking at connectivity without mobility (eg. for home usage). However this is still a smaller market as
compared to the total market.
Bargaining Power of Suppliers
There are suppliers both local as well as international for Dialog Telekom in various operations it
performs. For network connectivity back haul is critical. Dialog Telekom does not own a national
backbone hence has to depend on local providers. It is only a few like SLT, MTT and few other VSAT
operators who have direct access to the national back bone. Hence these suppliers are quite powerful
and certain suppliers are indirectly competitors as well. For this reason Dialog Telekom has recently
acquired MTT and now it is part of the group and operates as a subsidiary known as Dialog Broadband
Network.
Sri Lanka being a small country with a comparatively smaller number of data/voice users the traffic
generated is quite low. With this the bargaining power of upstream providers (eg. specially International
ISPs), Content Providers for VAS and peering partners are high.
Rivalry among Competing Firms
Even though the competition is high in the Sri Lankan mobile communication market, there are few
factors which have given the edge to Dialog Telekom over others. The product and service characteristics
offered are different to most other operators. They have a variety of Value Added Services like Star Call,

13. e-Channeling via mobile, RingIN Tones, Push N Talk, Photo Technica& D-Services are to name a few.
These are becoming popular among the users and most operators provide only basic services.
Also the amount of investment for the new services as well as expanding the coverage and capacity is
quite high. This is also another differentiator which gives Dialog Telekom the competitive edge. The
diversity of the rivals in the industry is another factor. As such Dialog Telekom competes on value
addition and differentiation, while most other operators compete on rates and coverage.
Hence Dialog has surpassed all the mobile operators as well as it has gained more subscribers than
incumbent SLT, which reflects how it stands apart from others due to above factors.
SWOT Analysis
Strengths
1. As the first mover of GSM in Sri Lanka technology, has a greater competitive advantage.
2. Strong infrastructure and hence the mobile telecommunication coverage is one of the widest and best in Sri
Lanka.
3. Relationship with a telecommunication giant in the region; Telekom Malaysia Group.
4. With numerous collaborations with other Telecom Corporations, has enabled Dialog to have a global reach
with services such as High Roaming and Satellite Coverage.
5. Aggressive marketing strategy allowing Dialog brand name to be carried to every corner of the country and
hence to have a good and stable Brand Equity.
6. As reflected in the financial analysis the financial stability of the organization with all the current investments.
7. Strong Public Relations that has been built up over the years.
8. Greater CSR involvement, reflected via the CSR initiatives that has taken place.
9. Technology leadership with high technical innovation. This is powered by there Applied Research &
Development initiatives in areas such as GPRS, MMS, EDGE, Intelligent network services, SMS,
GPRS/WAP, IVR....etc.
10. Boosting company image through investors confidence reflected via share prices.
11. Strong island wide distribution network.
12. Greater level of customer satisfaction via high quality customer support.
13. Well established customer base.
14. Extended breath of product range.
15. Skilled and dedicated Management Team
16. High level of corporate business knowledge retention through low employee turnover (exception is the front-
office staff).
Weaknesses
1. No Clear focus for a broader market even though there is a huge investment on advertising and value addition
through technical innovation.
2. Poor performance as an ISP.
3. Lack of pricing innovations compared to the competitors.
4. Distributed nature of the Head Office in the city of Colombo due to non-expandability of current location.
5. Decreasing level of motivation of internal employees due to multiple strategies of very high impact being
deployed simultaneously without managing the resulting confusion and disillusionment.
6. Decreasing trend in Quality of Service due to the rapidly growing customer base.
7. Employee turnover is high in the front-office (Call Centre and Help Desk).
Opportunities

14. 1. Telecom, is one of the fastest growing sectors in Sri Lanka's 19.5 million people and the Central Bank
estimates that 4.5 million users have mobile phones as at end 2006.
2. Continuous development of the communication industry.
3. Low fixed line penetration.
4. The acceptability of the Value Added Services (VAS) by the users hence increasing the probability of success
of any new VAS initiative.
5. The strategic partnership with Vodafone UK.
6. Potential to reap benefits of Value Chain Convergence.
7. Technology advancements especially in the realms of mobile multimedia technologies and the advent of the
next (3rd) Generation of mobile communications.
Threats
1. All 3 other existing GSM Mobile service providers pose a threat at different magnitudes.
2. The 5thMobile operator license in Sri Lanka has been offered to India's BhartiAirtel Ltd to launch the 2G and
3G services in 2007.
3. All 3 existing CDMA service providers too pose a different kind of threat.
4. Strongest Competitor, the Mobile wing of fixed line telecom giant SLT is focused on cost-leadership
competitive advantage strategy through its low cost pre-paid product to the mass market. (Remember more
than 80% of Dialog subscribers are low income pre-paid users.)
5. Volatile changes in the political, social and economical conditions and the laws and regulations and their
interpretation (Eg : TRC regulations)
6. Changes in currency exchange rates and high inflation which is badly effecting the global business.
7. Due to customer awareness the rapid change in customer preferences and their growing needs.
8. Changes in technology.
9. Uncertainty due to the escalating counter terrorist campaign. For instance Dialog had to switch off all base
station in northern province during the last few months due to military operations by the Sri Lankan
government forces.
Strategic Alternatives & Recommendations
Corporate Strategy
Considering the current performance, the Key Success Factors and the SWOT analysis the directional
strategy alternatives would be as follows.
Growth strategy to expand the activities of Dialog Telekom further would be the first alternative.
Since the current product lines have real growth potential concentration of resources on those
would be ideal. In concentration Dialog Telekom can follow the vertical growth strategy to take the
benefit of the value chain convergence opportunity that is existing in Sri Lankan context.
Stability strategy to continue with current activities without any changes to the direction would be
the second alternative. Here Dialog Telekom can utilize pause/proceed with caution strategy to
have only incremental improvements while the weaknesses stated are overcome. It can use this
time to stabilize the organization due to the changes took place due to multiple strategies it
adopted earlier such as acquisitions and investing on innovative developments, which will help to
get back the loosing internal employee motivation.
The first alternative will move Dialog Telekom further away from the competition and create a monopoly
temporarily for converged industries of telecommunication, content & media and retail. However
unfocused highspeed growth to capture the market without stabilizing the existing acquisitions can

15. disassemble everything. The second alternative will give Dialog Telekom and its employees much
needed breathing space.
The recommendation would be to implement the second alternative initially to stabilize the organization
without any other drastic change in the direction. And after some time they can adopt their long-term
beneficial value chain convergence option depicted in first alternative.
Business Strategy
The business strategy alternatives available for Dialog Telekom to improve the competitive position in the
industries it operates would be as follows.
The first alternative for the competitive strategy would be to improve on the current strategy of
differentiation. It can improve this by having unique value added services for each of its current
strategic business units DBN, CBNSAT and Dialog Telekom itself. This can improve the customer
loyalty and thereby can charge a reasonable premium rate than competitors.
The second alternative which Dialog Telekom can try to implement is cost leadership to overcome
the threat of lower rates provided by competition, Mobitel. Since the VAS are less in Mobitel the
switching from Dialog to Mobitel is not much in urban people who use these VASes. But people
who are using purely as a voice/SMS only are shifting as most of them are cost conscious and
there is no much of a different in coverage. Hence if Mobitel improves on its VASes it would
become a serious threat, at which stage it would be only the rates which decides the attraction of
that segment of the market.
Typically the differentiation strategy is more likely to generate higher profits than low-cost strategy.
However differentiation strategy implementation may involve higher investment than low cost strategy.
Competitive scope is an important factor when considering competitive strategies. The recommended
alternative depends on the competitive scope in this situation.. Considering both alternatives and there
pros and cons of each, most ideal should be to have culmination of both differing from the segment of the
market. Dialog Telekom should have a focused differentiation strategy in the market where people are
valuing the VASes and cost focus in the market where usage is purely for voice/SMS.
Simultaneously Dialog Telekom should look at strategic alliances as a corporative strategy to gain
competitive advantage by working with other organizations. Currently they have stated this with some
banks and some supermarket chains as mentioned above. However this can be vastly improved to
include alliances with Insurance Companies, Stock Brokers, Popular Food Chains etc.
Functional Strategy
Most of these functional strategies are developed considering Dialog Telekom operations, hence they
cannot be applied directly to Dialog Telekom's other strategic business units like DBN and CBNSAT.
Functional strategies based on the strategic choice of corporate and business strategies should be as
follows.
TheMarketingstrategycurrently followed by Dialog Telekom should be slightly modified to
accommodate the business strategy of cost focus. There should be new packages to attract new
customers as keeping existing customers who require basic voice & SMS. This product/package
development for the existing market can be supported by improving the current "pull" marketing
strategy for advertising and promotion.
Dialog Telekom should not do any changes to therecurrentFinancialstrategyas they are going to
have pause/proceed stability corporate strategy. Hence they could further improve there financial
stability as there are no major growth strategies to be implemented.

16. Dialog Telekom being a technological leader,R&D/Technology strategyis critical for its
performance. They should further improve R&D capabilities by having strategic alliances with their
major technology vendors. This is because most of these vendors are the pioneers in developing
latest technological developments. This will be mutually beneficial to both the parties.
TheOperationalstrategyof Dialog Telekom should be streamlined to have a common, more efficient
and effective operations flow with all business units. This requirement has arisen from the recent
expansions and acquisitions. Also change management would be required in creating a common
culture among Dialog Telekom, DBN and CBNSAT.
TheHuman Resource Management strategyis another key functional strategy for Dialog Telekom.
It should review its programs and procedures to suit the new stabilizing corporate strategy. It
should improve on its current team based working environment to self-managing work teams which
is more suited for an organization where rapid growth is anticipated in future.
The currentInformation Systems strategyshould also be changed to handle enterprise ICT
development in much more strategic level. The Information Systems developed should be aligned
with corporate and business level objectives. And also there should be an integrated approach
among business units as much as possible.
Apart from this Dialog Telekom should outsource certain operations such as legal, IS/IT
infrastructure support, Advertising, 1st level Call Center operation etc apart from the already
outsourced operations like cleaning and transportation. This is mainly because there is no major
distinctive and/or core competencies of Dialog Telekom in the above areas.
Dialog Telekom is known for its quality innovations due to their high emphasis on Research &
Development. However these precious research and their development work needs to be
protected by patents, copyrights and other legislative means. Hence if applicable, Dialog Telekom
should aggressively follow these protective legislations.
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Implementation
Evaluation & Control
Conclusion
Presentation Slides
Slide : External Environment Analysis
1. PEST Analysis
2. Porter's Five Forces Analysis
3. SWOT Analysis
Slide : PEST Analysis
Political
1. Positive foreign investment policies.
2. However, political direct intervention, bureaucratic attitudes and poor governance exists
3. Terrorism & counter-terrorism

17. Economical
1. Unstable macro economic environment has a negative impact on the industry.
2. The gradual fall of the exchange rate over the years.
3. Inflation has reached more than 20%.
Socio-Cultural
1. Better social conditions than other developing countries.
2. High literacy rate.
3. Low infant mortality rate
4. Long life expectancy.
5. Educated and trainable work force.
6. Bureaucratic attitudes, inefficiencies and discrimination exists.
Technological
1. Sri Lanka depends on technology transfers from foreign direct investments.
2. TRCSL encourages local research and development.
3. Poor adaptation of technologies in a timely manner - Risk averse.
Legal
1. Telecommunications Regulatory Commission of Sri Lanka (TRCSL).
2. Ensures fair enforcement of Government policy,
3. Hold operators accountable for performance.
4. Addresses consumer issues,
5. Monitor changing industry needs, and provide feedback to the policy making units.
Five forces
Threat of New Entrants
1. Fifth mobile operator license awarded to AIRTELL,
2. However as per TRCSL, there won't be any more licenses awarded.
3. This creates an entry barrier for any others to the market.
Bargaining Power of Customer (Buyer)
1. Consumer protection groups are almost non-existing.
2. Compared to Western countries, customers are not very strong in their demands.
3. Quality, standards and support are comparatively not major concerns if they exist at a basic level.
4. Switching costs are low.
5. Customers are very cost conscious.
Threat from Substitutes
1. Very minimum.
2. Alternatives are fixed line and the more recent CDMA connectivity.
3. However this is still a smaller market as compared to the total market.
Bargaining Power of Suppliers
1. Local & International Suppliers for Dialog
2. Depends on SLT, MTT and a few other VSAT operators to access the national backbone.
3. Hence these particular suppliers are very powerful.
4. Acquisition of MTT and the creation of the new subsidiary known as Dialog Broadband Network.
Rivalry among Competing Firms
1. Very high competition with continuous price/coverage wars.

18. 2. Dialog has an edge because of their VAS & differentiation strategy and the huge customer base.
3. Value Added Services becoming very popular among the consumers.
4. VAS examples: Star Call, e-Channeling via mobile, RingIN Tones, Push N Talk, Photo Technica& D-Services.
SWOT Analysis
Strengths
1. First Mover of GSM Technology in Sri Lanka.
2. Strong Infrastructure, Alliances and Global Coverage.
3. Aggressive Marketing Strategy & Stable Brand Equity.
4. Strong Public Relations & Greater CSR Involvement
5. Technology Leadership through Applied Research & Development.
6. Strong Island Wide Distribution Network.
7. Well Established Customer Base & High Quality of Customer Support.
8. Wide Product Range.
9. Skilled and Dedicated Management Team.
Weaknesses
1. Lack of Focus for a Broader Market.
2. ISP woes.
3. Lack of Pricing Innovations Against Competitors.
4. Real Estate Issues.
5. Confusion, Disillusionment & Decreasing Motivation of Employees.
6. High Employee Turnover - Front Office
7. Gap in Quality of Service Against Growing Customer Base.
Opportunities
1. Telecom, a Fastest Growing Sector in Sri Lanka.
2. Low Fixed Line Penetration.
3. The acceptability of the Value Added Services (VAS).
4. Strategic Partnerships.
5. Value Chain Convergence.
6. Technology Advancements
Threats
1. Competition.
2. Volatile Changes in the Political, Social, Economical, Technological & Legal Spheres.
3. Managing Customer Expectations.
4. Terrorism & Counter-Terrorism.
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