ISSN: 1391 - 0531
Sunday March 02, 2008
Vol. 42 - No 40
Financial Times  

SLT group subscriber base grows, stake sell-off in legal tangle

The Sri Lanka Telecom PLC (SLT) group, the country’s biggest telecom operator, saw its subscriber base grow last year for fixed phones, mobiles and CDMA connections but the company is entrenched in a legal tangle over the sale of a stake owned by Japan’s NTT.

Group post-tax profits rose marginally to Rs.5.6 billion in calendar 2007 from Rs.5.4 billion the previous year while post-tax profits at SLT alone (sans its subsidiaries) eased by two percent to Rs. 5.4 billion due to price reductions and inflationary factors. Officials said the most significant development in the year was profitability at Mobitel, SLT’s mobile arm, from a loss—making position in 2006.

Last week, former Minister Mangala Samaraweera won a court decision to be listed as the new petitioner following the death of parliamentarian Sripathi Sooriyaarachchi in a case the latter has filed against the sale of NTT shares to Malaysia’s Maxis Group. (See box story)

SLT CEO Shoji Takahashi said 2007 was a mixed year where the company achieved several milestones such as business diversifications, improvements to credit ratings, gaining BOI duty concessions etc, while reducing prices. “This is important to maintain our competitive position in the market even though there is a marginal impact on our current year results. Our strategy to move from traditional voice business to package solutions will definitely differentiate SLT from others in the market place,” he said in a statement.

SLT said its fixed line customer base increased from 1.18 million at end 2006 to 1.43 million by end 2007.

In terms of CDMA connections, there were over 224,000 new ones against, marginally higher from 223,000 in 2006.

SLT said it reduced the connection charge in May from Rs.18,400 to Rs.12,500 and in November introduced the CDMA Vplus package at a charge of Rs.7,500 for customers who wish to use the phone only for voice services. The price reductions dipped the revenue by 11% to Rs.3.4 billion.

Revenues in terms of international settlement in payments and IDD call charges grew by 32 percent as the international incoming traffic has increased but foreign call revenue continued to drop due to competition, the company said. By the end of 2007 the company had more than 54,000 ADSL customers and 88,000 post paid Internet dial up customers.

Mobitel, the company said, showed strong growth in terms of revenue, subscriber base and profitability. Revenues rose by 32 percent to Rs. 7 billion with a net profit of Rs. 254 million against a loss of Rs. 64 million in 2006.

The mobile customer base reached 1.4 million against 885,000 at the end of 2006.

Mangala Samaraweera petitioner in SLT Case

Parliamentarian Mangala Samaraweera was allowed, through a motion by the Supreme Court of Sri Lanka on Monday, to replace former petitioner, the late Sripathi Sooriyaarachchi, in the fundamental rights petition filed regarding the proposed sale of Sri Lanka Telecom (SLT) shares by Japan's Nippon Telegraph and Telephone company (NTT) to Global Telecommunications Holdings (GTH), the parent company of Malaysia's Maxis Communications.

The Supreme Court granted further interim relief, barring any action regarding the sale of SLT shares on Monday after the Court had first granted the interim order in June 2007. In addition, the Court also issued an interim order in which the Secretary to the Cabinet is expected to deliver all documents regarding the proposed share sale. Prior to the filing of the fundamental rights petition, NTT was expected to sell off 25.3 percent of its 39.2 percent stake in SLT to GTH. The government of Sri Lanka still retains the majority 49.5 percent of the SLT shares with the remainder being held by the public. The case is listed to be mentioned on 10 March 2008.



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