SLT shares a good long-term stock

By Akhry Ameer
Sri Lanka Telecom (SLT) fell after initial optimism when it opened to the public last month. But that doesn't worry company chairman Thilanga Sumathipala, who is confident the stock will pick up again. In a wide ranging interview, the suave businessman, who is also making another bid for the Sri Lanka Cricket Board presidency, talks on a range of issues confronting his giant organization.

The price of SLT shares has dipped below its original issue price. How do you see this development?

There are mixed signals, the short term and retail investors are a little panicky with the announcement of the EGO (External Gateway Operators) licenses. Therefore they are concerned to sell it quickly. But overall looking at the actual value of SLT shares we feel the IPO investor will never be disappointed.

From all the indications we believe the price was right and it was a good investment. The stock exchange index has also gone down and since the SLT shares are a huge share of the market it affects out share value as well.

After the road show promoting the IPO you were quoted as saying there was a lot of interest from foreign investors, but it did not turn to investments. What are the reasons for this?

We were expecting around $ 10 million and finally attracted a little over $ 4.5 million. The time frame (between road show and IPO) was very short. There was also the constraint of the CSE (Colombo Stock Exchange) index not being on Morgan Stanley. Hopefully, they will put it up soon.

I think there are long-term and short-term investors of our shares. They are watching the CSE. The CSE will have to be supported by the government of Sri Lanka and other institutions, and it will take time to build investor confidence. As for SLT, it is doing things right and we feel that there is still room for investment. People are watching and are keen to participate at some point of time.

SLT's privatization or selling of government shares has just started, so there is a bigger role. More shares will be put on the market, but not with immediate effect, at least for the next 12 months.

Who benefits from the proceeds of the IPO, and did any new large investors emerge?

The entire proceeds go to the government. Our biggest shareholder holds Rs. 100 million. We haven't seen any bigger shareholder coming in. But getting 25,000 shareholders was a good feeling. Our expectation was for Rs. 800 million to Rs. 900 million worth of retail investors. We knew that there was the national feeling of ownership, and we ended up with Rs. 1.2 billion worth of retail investors. The concept of broad basing the ownership has not got a true meaning (as much as seen from our IPO).

SLT's monopoly as the EGO ended with the liberalization of EGO licences. How will this affect the company’s revenues considering that international calls was a significant share of the revenue stream?

SLT always knew that liberalization was around the corner and that the EGO monopoly was expiring. We have planned our business accordingly. We are ready to meet the challenge. There are three components to our revenues: international telephony, interconnection, and local tariffs (telephony). Looking at the three put together if the proposed Telecom Regulatory Act and the liberalization policy is handled carefully SLT should be safe.

What would you think would be the optimal number for EGO's and would your subsidiary Mobitel also apply for one?

Technically speaking there won t be room for more than two major players. Others will not be able to sustain it. The moment you open up, other related businesses can also start, we will have to wait and see.

Mobitel has its own business plans. They have their own international division and want to wait and see. Mobitel is free to work with any EGO that comes in depending on the rates. If SLT's rates are attractive they may even choose us.

Another tariff rebalancing is due for the SLT. How will this affect the call charges?
The commitment in 1997 was to have five rebalancing slabs. The workings are such that the fifth rebalancing will make the call charges truly cost based. Up till now it has been subsidized. We have made an application to the government for the fifth rebalancing and are awaiting a response.

The new CPP (Caller Party Pays) system is to be introduced shortly. How will this affect the SLT?

I think CPP is going to be a trend. It is a policy the government has adopted and we will support it. Our subscribers should be given ample indications when calling higher tariff numbers and features to control them like locking the facility to dial these numbers. We will be ready with these facilities in August.

The NTT management agreement came to an end last August. What is the role of NTT now?

The Chief Executive Officer from NTT has been retained by us. We have also invited a Chief of Finance from Japan. They are both retained on contract. As far as SLT is concerned, there are enough capable people within. If necessary we will invite others to give knowledge. SLT is off the ground, so there is no problem in handling the day-to-day affairs.

The absenteism of an NTT contract also means no technical input. How do you see this change in the organisation?

Looking back at 1997, SLT was still making profits. The NTT staff was also reduced gradually and we had only nine people in August. SLT''s technical staff was not far away. They are competent to take SLT forward. If we need advice we can always consult British Telecom, Singapore Telecom, etc.

I am happy to say that the interest of the staff is superb; they feel it is their own company. Management practices like 5S, Kaizan, Workplace Corporation were adopted by the Japanese at SLT. This thinking came through NTT. If not for them SLT would not be what it is today.

What are the efforts being taken by SLT to reduce cost of retail data services like Internet access?

We are launching ADSL. We will hopefully have 6000 subscribers. You can utilize ADSL for any sort of communication, data, voice, video, etc. We have written to TRC (Telecom Regulatory Commission) for approval with a tariff based on the bandwidth. However, in the first stage we can only support 6000 connections. On the corporate side we are trying to develop a little over four acres in Welikada to house a call centre, disaster recovery, and other IT requirements of SLT. Right now there is a lot of foreign investment coming in for call centre business and there is not enough facility to meet the demand.

We are looking at a one-stop shop concept for this which is to be handled as a separate project.

Dialog launches Bilingual e-mail on internet

ialog Internet in collaboration with Microimage recently launched a truly innovative in Sinhala and Tamil email service, aimed at easing the language barrier in using the Internet.

Dialog Internet's Sinhala and Tamil email service which is engineered by Microimage, a Sri Lankan applications development company, allows the user to type Phonetic Sinhala or English using the English Alphabet - e.g. "Kohomadhe" and have it automatically displayed in Sinhala or Tamil fonts. The receiver would receive the email in Sinhala or Tamil although the sender would have typed it using the English Alphabet.

Dr. Hans Wijayasuriya, the Chief Executive of Dialog described Microimage's innovative web-based Sinhala/Tamil email platform as revolutionary in the context of popularising Internet and email usage among Sri Lankan citizens. "This latest addition to our portfolio of Internet based services has broken a major barrier with respect to the use of email as a primary form of communication among Sri Lankans both here and abroad."

Since its launch, the service has met with astounding success, with a massive response from both, Sri Lankans living here and abroad. A record number of users have already registered with the service, both from home and overseas, an official statement said.

This unique service is especially beneficial to Sri Lankan students overseas who want to email their parents back home in Sinhala or Tamil, and businessmen who need to email non-English speaking suppliers or business associates. Harsha Purasinghe the Chief Executive Officer of Microimage said, "this engine was a evolution of our local language software product which was introduced in 1995.” We were happy to partner Dialog Internet for this solution as dialog is a leader in introducing new technology and solutions and also due there long term vision of expanding dialog Internet services to the rural communities through Cybercafes."

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