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Home > Communications > Telecommunications > General Telecom
Sri Lanka Telecommunications Report Q4 2008
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With a number of telecoms operators from emerging markets (India’s Bharti Airtel and RelianceCommunications are due to launch mobile services before YE08, with MTNL considering a minor stakein fixed-line operator Suntel) realising Sri Lanka as an important investment destination, with its fastgrowthmarket, existing operators have sought to prepare ahead of the additional competition.
Mobiltel, the mobile operating arm of Sri Lanka Telecom (SLT), raised its prepaid base two fold overthe year ended March 2008, as it tapped into low-income niche market segments, having launched a tarifffor civil servants and later, a package directed at public sector workers. Its civil servant package reported100,000 new subscribers per day, while its public sector worker tariff has a potential market size of1.1mn. With an expected rise in demand, the operator has invested in expanding its network to ensuregreater capacity with the help of Huawei Technologies. The operator is not the only one to announce arise in operating expenditure, with Hutchison Lanka, the country’s fourth-ranked mobile operator,announcing similar increases due to network expansion. This led to a 26.1% y-o-y decline in EBITDA toHKD34 as of H108.
All four operators and potentially the newcomers, will face an uncertain operating environment, withpolitical and security issues a major area of concern. This, combined with the introduction of strictercustomer registration requirements as experienced in Bangladesh, which led to a number of customers,particularly prepaid rural users, disconnected as they did not have the appropriate documentation. BMIestimates that there will be over 3mn net additions to Sri Lanka’s mobile market in 2008 resulting in11.1mn mobile subscribers. However, a delay to the launch of Bharti Airtel and RelianceCommunications operations could have a negative impact on this forecast, as could re-registration andany worsening in Sri Lanka’s ongoing conflict in the north and eastern parts of the country.
High costs of internet connection mean that internet take-up is very low in Sri Lanka. It is an importantaim of the government’s to alter this. At the end of 2007, our estimates of broadband penetration were0.3%. BMI fully expects this to grow to 3% by the end of the decade, driven by greater competition in themarketplace, reduced tariffs and the rise in popularity of mobile broadband services. These factors shouldcombine to ensure a total of 2.2mn broadband subscribers at the end of 2012.
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