shares a good long-term stock
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.
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.
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.
from the proceeds of the IPO, and did any new large investors emerge?
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).
as the EGO ended with the liberalization of EGO licences. How will
this affect the companys revenues considering that international
calls was a significant share of the revenue stream?
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.
you think would be the optimal number for EGO's and would your subsidiary
Mobitel also apply for one?
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.
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.
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.
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.
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.
of an NTT contract also means no technical input. How do you see
this change in the organisation?
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
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.
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
launches Bilingual e-mail on 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.
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
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.
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."