Telecom posts massive hike in first half profits

31 Aug 2004

Sri Lanka Telecom (SLT) has said it made a net profit of LKR1.7 billion in the six months to the end of June 2004, a rise of 74.5% on the LKR974 million posted for the year earlier period, thanks to a solid business performance and a reduction in overall costs. The company said total revenues grew by 14% in the first half thanks to a solid performance by its core fixed line division and an improved display from its cellular unit Mobitel, which increased its turnover to around LKR1 billion. SLT said its bottom line was also boosted by a 20% reduction in interest expenses to LKR1.3 billion.

Despite facing stiff competition from two rivals, SLT dominates Sri Lanka’s fixed line market with 823,000 subscribers under its control at the start of 2004, equal to more than 85% of the market. Its competitors, Suntel and Lanka Bell, both provide a full range of telephony and data services, predominantly via wireless in the local loop (WiLL) technology, although both also rely on interconnection agreements with SLT to some extent.

It plays a much smaller role in the highly competitive cellular market, where its subsidiary Mobitel had around 225,000 subscribers at the end of 2003, leaving it well behind its more established rivals MTN Networks (owned by Telekom Malaysia – 825,000 subscribers) and Celltel Lanka (368,000). Mobitel launched its TDMA network in 1993 and has been wholly owned by SLT since November 2002 when the PTO paid LKR922 million to acquire the 60% of the operator that it did not already own from Australian incumbent Telstra. SLT is expecting continued growth at Mobitel to lead to the posting of record full-year earnings of LKR3.1 billion in 2004, rising to LKR3.6 billion in 2005.