Business Times

No shareholder agreement weakens Govt. control in SLT

Fitch Rating Sri Lanka this week noted that the absence of any ‘explicit shareholder arrangement’ between the Sri Lankan Government and Sri Lanka Telecom (SLT)'s 44.9% shareholder - Malaysia's Usaha Tegas – could ‘potentially dilute the Government’s influence over SLT's operations’.
Its comments came while upgrading Sri Lanka Telecom's (SLT) Long-Term Foreign Currency (LTFC) Issuer Default Rating (IDR) to 'BB-' from 'B+'. Usaha Tegas owns Malaysia’s Maxis mobile phone company, both of which are owned by Sri Lankan-origin Tamil businessman Ananda Krishnan.

According to a SLT board director, the shareholder agreement was not signed due to a Supreme Court ruling in a fundamental rights case filed by the late Sripathy Sooriyaratchchi, a one-time parliamentarian and minister of the ruling UPFA. However the court permitted SLT shares to sold to Usaha Tegas.
Fitch said SLT's Foreign- and Local-Currency IDRs are constrained by the respective sovereign IDRs, and any future change in the sovereign ratings will lead to a corresponding change in SLT's ratings.
“This is primarily due to the government of Sri Lanka owning, directly and indirectly, more than 51% of SLT,” it said.

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