'Govt. hold on SLT would be unaffected by NTT deal'

Hiran H. Senewiratne

TELECOM: The 25 per cent share-divesting plan of NTT of Japan would happen in the future although there is a lot of opposition from various political elements in the country, NTT sources said.

NTT has the sole right to dispose their owned shareholding, which is currently more than 35 per cent of the entity, sources said.

However, the Secretary to the Ministry of Post and Telecommunication W.M Piyasena said that the 25 per cent share-divesting plan of NTT of Japan would not affect the Sri Lanka Telecom (SLT), which is just a deal between two companies.

He said there is no need for anybody to panic and NTT would dispose only 25.3 per cent of their shares, while they currently owned 35.2 per cent of the total shareholding. Therefore it will not affect the Government's hold on the entity.

Piyasena said that at present the Government of Sri Lanka owned 49 per cent of SLT and the disposing of 25 per cent of NTT Japan shareholding would not affect the SLT. At present negotiations are going on with Malaysian based telecom giant Maxis Telecom Malaysia.

According to Piyaseana a special Committee has been appointed by President Mahinda Rajapaksa to investigate companies that are planning to purchase their shares, which has the sole authority decide on this share divestiture.

Meanwhile, SLT shares were also heavily trading at the Colombo Stock Exchange, A certain foreign telecommunication company has completed due-diligence on SLT NTT shareholding, Business Development Manager Exchange, Bartleet Mallory Stockbrokers Limited Angelo Ranasinghe said.

SLT currently has a customer base of 800,000 doubling its number of subscribers in five years. SLT provides a range of services to domestic and corporate subscribers including domestic and international voice, internet services, data services, domestic and international leased circuits, frame relay services, ISDN, ADSL, satellite up-link service and maritime transmission.

With its acquisition of Mobitel, the third largest mobile operator, SLT becomes the only integrated operator in this country to offer fixed line, data and mobile services. Mobitel will begin a phased transfer of its subscribers from its existing network to a third generation mobile network.

In five years since privatization SLT has transformed itself from a moribund and lethargic state entity to a dynamic service provider able to compete with the best in the world.

This it has done by upgrading its communications infrastructure, strengthening its marketing skills and strategy, installing new financial systems and controls, and making best use of its human resources. Over LKR 40 billion has been invested in the past five years to upgrade telecommunications infrastructure and create a state-of-the-art network.

486,997 direct exchange lines (DELs) have been added in five years and SLT's telephone penetration in the Colombo Metropolitan area has increased from 8.9 per cent in 1997 to 15.2 per cent as at 30 June 2002. Its telephony penetration in Sri Lanka increased from 1.7 per cent to 3.9 per cent during this period.

Service quality improved remarkably after privatization. Faults clearance within 24 hours reached 96% in the Colombo Metropolitan area and 83% in the whole island in 2002. The faults rate came down to 7.3% in 2002.

The call completion ratio recorded its highest, 46.5%, the same year. Productivity improvements such as DELs per employee went up to 93 as opposed to 36 in 1997. The company also obtain the BOI status company recently.

SLT has benefited immensely from its alliance with NTT. NTT has provided strategic advice, trained SLT employees and helped the company develop its marketing infrastructure and strategy. NTT expertise has also facilitated the development of SLT's network, service platforms, information technology and its operating and financial controls and systems.

For the year ended December 31, 2002, SLT had a revenue of LKR 25,383 million and generated a net profit of LKR 2,685 million.

The company had net assets of LKR 39,062 million and the group net assets were LKR 38,789 million as at 31 December 2002. SLT incurred a capital expenditure of LKR 3,445 million for 2002 on strengthening its network and infrastructure. In addition, SLT also accrued the balance 60% of Mobitel (Pvt) Ltd. at a cost of LKR 922 million.