Financial Times

SLT scraps Rs 50 billion project to boost mobile business
Sri Lanka Telecom's decision to scrap its Rs. 50 billion 'Telecom City' project was based on the desire to focus on its core business and give priority to developing its loss-incurring mobile phone subsidiary, said the company's new chairman Anil Obeyesekere.

SLT is now concentrating on its planned $100 million bond issue to raise funds that would be used to reduce debt and invest in improving the mobile phone business of Mobitel, he said.

"Projects have been prioritised and first place has been given to Mobitel's expansion," he told The Sunday Times FT. "If we raise enough money from the bond issue we will use the funds to pay off half our debts, invest the balance in Mobitel and increase revenues streams."

SLT announced last week that the new board had decided to abandon the project for which a subsidiary called Telecom City (Pvt) Ltd had been set up.

The Rs 5 billion first phase of the project, meant to support mainly international call centre operations, was launched in January by the former regime under then-chairman Thilanga Sumathipala. The project, which will also provide data storage and management services, communications hubs and vendor businesses supported by SLT's infrastructure, was expected to have been completed by 2010 with a total estimated investment of Rs. 50 billion by all stakeholders.

Obeyesekere dismissed speculation that the project was abandoned because of politics as it was initiated by the previous regime, saying the former chairman's name did not even transpire at the board meeting where the decision was made. "It has nothing to do with politics. We're a private company. If the project is viable and good for the company we'll do it."

Stock market analysts welcomed the move saying SLT's decision to focus on immediate revenue generating business was wise as the Telecom City project would have made profits only in the long term.

SLT needs to boost revenue which was affected by the loss of its monopoly on international calls resulting in lower revenue from international calls.

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