TELECOMMUNICATION INDUSTRY IN SRI LANKA: MARKET CONCENTRATION AND CUSTOMER SATISFACTION

Abstract

: The telecommunication industry plays an important role in global economies, with mobile services making substantial contributions to GDP. In 2022, this sector's economic impact reached an impressive USD 4.62 trillion. The COVID-19 pandemic further underscored the vital role of telecommunications (Kaskar and Patel; 2022). This study focuses on the market concentration within the telecommunication industry and evaluates customer satisfaction with telecommunication services in Sri Lanka. Data from 419 individuals were collected via an online survey, and binary logistic regression models were applied to analyze customer satisfaction with telephone and internet services. To evaluate market concentration, the study has used the Concentration Ratio of the strongest enterprises (CRm) and the Herfindahl Hirschman Index (HHI). The results of the study challenge the perception of monopolistic market behavior within Sri Lanka's telecommunication industry.

The results emphasize the key factors influencing customer satisfaction. Price, promotional events and incorporating users' ideas emerged as significant drivers of customer satisfaction with telephone services. Price and network connection quality were found to be crucial determinants of customer satisfaction with the internet services. To thrive in this competitive industry, telecommunication firms must prioritize efficient customer care services and adopt customer-friendly strategies. Additionally, policymakers should concentrate on developing the telecommunication industry's infrastructure to ensure network stability and fostering its active participation in the country's future development.

JEL classification: L10, L13, L52, L96

Key words: Telecommunication services, Customer satisfaction, Market concentration, Monopoly, Network stability