Mobile phone market poised for rapid growth in next two years

Channa KASTURISINGHE

RAPID GROWTH: Sri Lanka’s telecommunication industry is poised for rapid expansion in the next couple of years mainly due to remarkable growth in the mobile communications market.

Experts say that Sri Lanka’s mobile penetration level surpasses other countries in the region including India and the growing subscriber level could especially help the economic activities in the rural areas.

According to the latest figures of the Central Bank, the subscriber level of mobile phones expanded further by 61 per cent last year and the subscriber level has now increased to 5.4 million.

A recent study by LirneAsia and AC Nielson shows that 36.6 persons out of every 100 owns a mobile phone connection in Sri Lanka while its neighbouring countries India and Pakistan lag behind.

In India only 13.4 persons out of 100 own a mobile connection while the number in Pakistan is 29.4.

Researchers expect that in the South Asian region including Sri Lanka the number of mobile phone users are expected to increase at a very rapid rate.

LirneAsia said that close to 100 million new cellular subscribers are expected to come from the rural areas in the region over the next two years and the prospective subscribers would be reasonably heavy users, making an average of 40 calls a month.

However, analysts caution that while operators are rolling out networks to the remote and poor areas, they also need to bring down the cost of owning a phone if they want to penetrate a highly budget-conscious rural market.

The rapid expansion of the mobile communications sector has also contributed to the growing activity level of the Colombo Stock Exchange in recent times.

The share prices of the leading mobile phone operator Dialog Telecom and Sri Lanka Telecom which owns the main rival Mobitel increased due to heavy local and foreign interest in the sector.

According to the Central Bank Annual Report 2006, mobile and fixed line service providing companies in telecommunication industry in Sri Lanka have had an excellent year, marking a significant 37 per cent growth in revenue.

“Clearing the backlog for fixed telephone lines with CDMA technology, subscriber levels of Fixed Access-Local Loop subscriber level recorded 651,681 new connections, an expansion of 52 per cent during the year.

In the recent past, both CDMA and GSM technology had allowed rural residents to get phone services immediately.

Meanwhile, the Internet and e-mail subscriber level grew by 13 per cent with developments in infrastructure which provide good quality, high speed data connectivity for internet access,” the Annual Report said.

The Central Bank also said that the expansion of the telecommunication sector in 2006 contributed to the overall growth of the services sector which continued to be the main contributor to the economic growth.

“Within the services sector, transport, storage and communication expanded by 13.1 per cent, (11.7 per cent in 2005) owing largely to robust expansion in the post and telecommunications sub-sector.

This sub-sector, that had continued to grow at a high pace, expanded further by 23 per cent, benefiting from recent developments in telecommunication, particularly broad band networks and expansion in coverage with new technology in communication,” Central Bank said.