The Sunday TimesBusiness

18th, May 1997




Celular phones free incomming calls soon

By Shamindra Kulamaanage

The long expected removal of incoming cellular call charges will be a reality very soon, The Sunday Times Business learns.

Sri Lanka Telecom has agreed in principle to iron out disparities with the four cellular companies over the use of the Sri Lanka Telecom (SLT) exchange. However, the impending sale of one of these cellular companies has adversely affected the negotiations, temporarily causing problems with regard to the final agreement.

As the agreement stands, the cellular operators are required to pay for the usage of the SLT exchange but the SLT does not pay for use of cellular network exchanges. "This does not make sense," said an official of MTN Networks (Pvt.) Ltd., which operates the Dialogue cellular network. In most countries, it is the caller who has to bear the full cost of the call, but in Sri Lanka, with regard to incoming calls on cellular phones, the receiving party also has to bear part of the cost, the Dialogue official said.

According to the agreement that is to come into effect by July, the SLT will be required to pay the cellular networks for all calls originating from SLT and being recieved by the cellular companies so that the cellular companies do not have to charge their customers for incoming calls.

The negotiations which are held under the patronage of the Telecomunications Ministry are attended by all four cellular network companies as well as the SLT. One of the main technical obstacles that the parties concerned face, is that the SLT does not have the facilities to distinguish between calls made to their own lines and to cellular networks. Distinguishing between the two has become important as the SLT would have to increase its charges made to cellular networks. In this regard the cellular networks have offered to supply their own records to SLT for them to trace the calls but no final decision has yet been taken.

A Mobitel official told The Sunday Times Business that the cellular companies would be compelled to restructure their packages so that they could accommodate incoming calls. He also welcomed the agreement saying that this was an issue the cellular industry had been advocating for a long time and added that their present exchange was well capable of handling the anticipated increase in cellular traffic.

However, one cellular company said that its existing exchanges would have to be immediately expanded to accommodate the potential increase in traffic.

The agreement which was intially to be finalised by June1 is being delayed due to the technical problems faced by the SLT and the impending sale of one network, business sources said.

Although the overall sentiment and approach has been very positive, speculation is also rife that certain cellular networks are considering the increase of the rental or outgoing charges to keep their revenue up as most of their existing packages will have to be totally overhauled.

Colombo Riders to dominate road s soon

Ceymo Automobile Manufacturers (Pvt) Ltd., officially opened its ultra-modern manufacturing plant at Seeduwa last week.

Ceymo is a joint venture between the Ceylinco group, trading giant Itochu of Japan and the world's leading omnibus designing company, Optare of U.K.

The Ceymo factory would be assembling state-of-the-art passenger buses to be marketed under the brand name Colombo Rider for both local and export markets.

The bus, which will be marketed locally at Rs. 1.8 million shortly, is fitted with power steering, 40 spacious luxury seats and in-built safety features.

The bus's reinforced fibre body and strenghtened chassis would also be affording passengers greater safety and reliability.

Options include various alternative seat types and configurations and airconditioning.

The plant would also be undertaking manufacture of buses according to individual customer specifications.

Special financial and leasing facilities will also be made available at no extra cost.

The bus is covered by a one-year warranty. After sales service will be provided by Sathosa Motors and their service outlets countrywide.

Ceymo has already appointed Leyland Exports Ltd. as its official African distributor.

The distribution agreement was signed by Deputy Managing Director, Ceymo, Mr. H. Nagashima and the Managing Director of Leyland Exports, Mr. Inder Brar in Colombo on May 7.

New trade picks up

The newly established over the counter (OTC) board of the Colombo Stock Exchange is showing signs of becoming more active, after several months of relatively thin trading.

The OTC board was introduced in January to enable shares to be traded among investors without actually being admitted to the official list of the exchange and being granted a quotation.

This week Ceylon Leather Products Limited was registered for trading on the OTC board. The company has an issued capital of Rs. 100 mn. Ceylon Leather was only the second company to be registered. Janashakthi Life Insurance Compnay was the first company to be registered. Its shares have been trading between Rs. 11.25 and Rs. 13 this week.

The majority stakes of three plantation companies will also to be sold on the OTC board beginning from the end of this month. The PERC is selling a 51 per cent stake in Maturata, Malwatte Valley and Namunukula Plantations to shortlisted investors, under its plantations privatizations programme. At the moment shares of OTC board companies cannot be lodged in the Central Depository system accounts.

"But we are hoping to permit lodging in the future," CSE's Trading Manager Rajeeva Bandaranaike said.

Purchase and sale orders for OTC shares could be placed with brokers as in the case of quoted shares and the share certficates physically delivered.

A call for private sector pension firms

A top insurance official has called for government action to allow private companies to offer attractive pension plans for Sri Lankans.

"This is essential because the extended family concept is breaking down and people will have to fend for themselves in the future," head of Ceylinco Insurance Company's Life Division, R. Renganathan said.

Preliminary results of an Institute of Policy Studies project has found that Sri Lanka is aging at a rate never experienced in any other country in recorded history.

Experts have warned that the present unfunded pension system of the government would have to be radically overhauled to prevent the pension system from becoming unsustainable burden on the budget.

"When you have pension plans offered by private companies the burden on the government for welfare benefits is reduced," Mr. Renganathan pointed out.

Among private insurers Ceylinco Insurance Company has recorded the highest gross life insurance premiums last year at Rs 817 mn. It currently has a life insurance fund of Rs 1,039 bn.

Life Insurance companies which have devised strategies to cope with maturities running into decades are specialists in long term fund management and equipped with the expertise to provide pension policies.

At Ceylinco's life division the average contract period is 20 years.

Even in a life insurance policy all the premiums collected from policy holders are ultimately returned to the holder with benefits.

Pension contributions would also be chanelled into a separate fund.

"This fund should be free of tax or taxed at a very concessionary rate to enable us to pay an attractive return to policyholders," Mr. Renganathan said.

To encourage individuals to go into pension plans the contributions too should be deductible for tax purposes and when the pension plan matures, its payouts should also be made tax free.

He says this could complement the existing state and state administered pension funds such as EPF and ETF.

Sometimes employees have used the EPF balances as security for loans and may not have a substantial balance remaining at the time of retirement. Having an additional pension fund could be a lifeline to such individuals.

"We are collecting small savings," points out Mr. Renganathan. "We will invest them and provide funds for infrastructure, industry and government."

At present most of the funds of a life fund are invested in government securities. At December 1996 Ceylinco's life fund had Rs 460 mn invested in government securities and Rs 360 mn in banks deposits.

While insurance policies have long-term maturities, in Sri Lanka there are no comparable investments to match the maturities forcing insurance companies to carry mis-matches in their portfolios. However with the government now going for longer term instruments the way is opening for the private sector also to follow. However life funds were legally compelled to invest most of their funds in government securities at present.

But the Insurance Act is due to be amended. Mr. Renganathan said Ceylinco has sent their observations to the formulators and asked that companies be given more flexibility in their investment options.

Last year the Ceylinco Insurance has posted after tax profits of Rs 53 mn, showing earnings of Rs 6.31 per share said to be the highest among insurance companies and paid a 15 per cent dividend. The dividend yield was 7.41 per cent as at 31 st December.

The share was currently trading at Rs 23 at a P/E multiple of only 3.64 which is a substantial discount to the market P/E of around 12.

The company claims to have a 44 per cent share among the private sector life business and net assets of Rs 44.78 per share, which was higher than its market price.

The company says it has paid out Rs 78 mn (9.64 per cent of the premium income) to its policy holders said to be the highest paid by a private insurer.

Continue to Business page 2

Go to the Business Section Archive


Home Page Front Page OP/ED News Sports

Please send your comments and suggestions on this web site to or to