SRI LANKA: An unexplored telecommunications market

Like many other developing countries in Asia, Sri Lanka, too, is considered
as an emerging telecommunications market with lots of promise. And like any
other developing nation, the promise is conditional. Conditional because, even
though the recipe for growth exists, its ingredients have not been put in place
completely. Interestingly enough, Sri Lanka charted the telecom deregulation
path much before countries like India did. Moreover, the island nation’s
economy, measured in terms of per capita GDP, is more robust than that of India.
But all these have not translated into a noticeable growth in the telecom
sector.

Let us look at the ground realities. There is one fixed line operator, Sri
Lanka Telecom (SLT), and two Wireless Local Loop (WLL) operators. As of 1
January 2000, there were 580,200 subscribers and another 236,250 on the waiting
list of the partly state-owned SLT. As of 1 January 2000, 91,700 subscribers
were connected to the WLL services. The main operator, Sri Lanka Telecom was
partly privatized in 1997 when NTT of Japan bought a 35 percent stake in it.

This strategic tie-up resulted in NTT taking over the management of SLT, even
as the government continued holding the majority stake. The privatization
agreement included a provision to extend SLT’s monopoly control over all the
main international switches until 2002. This meant the government going back on
an earlier WTO commitment to eliminate the monopoly by 2000, besides affecting
the competitiveness of other operators in the sector.

Sri Lanka allowed cellular phones in 1989, almost five years before India
did, after it realized that that was the quickest way to provide phones to the
island. The island’s cellular phone market is growing at 10 to 12 percent a
month. There are four firms which operate cellular services in Sri Lanka – MTN
Networks (Pvt.) Ltd, a joint venture between Telekom Malaysia and Sri Lanka’s
Maharaja organization conglomerate, Celltel, Mobitel and Call Link. These four
private companies have provided close to three lakh mobile phone connections.
Private operators also provide radio paging, data communication, Internet
service and satellite link-ups.

Click here http://voicendata.www.ciol.com/content/features/201052501.asp