Developing Telecoms | Saturation slowing growth in Sri Lanka

23 May 2012

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Saturation slowing growth in Sri Lanka

Thursday, 22 September 2011 12:37 | James Barton

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At the end of March 2011, Sri Lanka’s mobile sector had a total of 17.852mn subscribers, following 393,000 net additions in the quarter. This represented the lowest quarterly growth since March 2009, when there were 403,000 net additions. Growth has been impacted by the maturity of the market, with penetration rates at about 85% at end-2010, combined with a highly competitive market. Further, affordability of services, despite a reduction in tariffs in recent times, continues to act as a barrier for further growth.

However, as noted by Research & Markets, the Sri Lanka Telecommunications Regulatory Commission (TRC) has done little to create a level playing field, with 82% of all mobile subscribers signed up to services with three operators Dialog, Mobitel and Etisalat. A lack of competition and market expectations that the sector is on the cusp of licence renewals, thereby creating uncertainty among operators, also resulted in restraint concerning investment in networks.

The Sri Lankan government spoke about the need to bring greater service accessibility over mobile networks to the population. According to the chief technology officer, Sanjaya Karunasena, of Sri Lanka's Information and Communication Technology Agency more work needs to be done to integrate mobile technology allowing citizens to interact, transact and make payment with their mobile devices. Similarly, civil servants have become location-independent and are connected all the time.

To realise this type of m-government, there is a need for significant amounts of investment particularly regarding upgrading and expanding network capacity. Incumbent operator Sri Lanka Telecom's mobile unit Mobitel is to invest LKR5bn (US$45m) into network expansion and modernisation of its network, which will include the deployment of a 4G LTE mobile broadband network. The new project, which involves the help of Chinese telecoms vendor ZTE is part of the i-Sri Lanka programme. The operator signed a Board of Investment agreement to trial and deploy an LTE network as part of the company's network project and will therefore enable it to import and buy project-related items duty free.

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