Deregulation of the telecommunications network has seen licenses for cellular telephones and electronic mail being issued to private companies. The government has also attempted to improve and extend the network, but the ethnic conflict has hindered progress. The privatization and deregulation has left a large number of foreign and local companies scrambling for a piece of the action in Sri Lankaís fast growing telecommunication industry.

Sri Lanka Telecom recently awarded a S$25 million telephone network license to a consortium led by Singapore-listed Transmarco. The license is one of two to build and operate a minimum of 100,000 fixed telephone lines using wireless local loop (WLL) technology. While the license calls for at least 100,000 lines by the year 2000, United Telecom (the consortium) hopes to install 300,000 lines in that period and have as many as 800,000 subscribers. This network will cost United Telecom nearly S$billion during the 20-year term of its license, with a possibility of a five year extension.

Despite the privatization and deregulation of ìvoiceî telecommunications in Sri Lanka, phone rates per minute are still comparatively high with living expenses. Domestic rates vary from zone to zone and is anywhere between Rs.1.50/min (3 cents per minute) to Rs.50/min( $1 per minute). Cellular phone rates started at phenomenal prices per minute and have since declined due to the intense foreign competition.

In January 1996 the Sri Lankan government appointed a five member consortium led by German investment bank Deutsche Morgan Grenfell to advise on the restructuring and privatization of Sri Lanka Telecom (SLT). The consortia has agreed to submit a report by July 1996 on how to re- structure Sri Lanka Telecom and make it more efficient as well as building a competitive framework. The consortium includes Deloitte-Touche, Tohmatsu International, Slaughter and May and the Development Finance Corporation of Ceylon. The Minister for Post and Telecommunications, Mr. Mangala Samaraweera will then select a strategic partner and decide how much of the company will be privatized. Initially 20% of SLT will be open for foreign investment, however it is unclear as to what percentage will be open for foreign investment. SLT holds a monopoly over all aspects of telecommunications in Sri Lanka except cellular services. The governmentís move to privatize SLT by the Public Enterprise Reform Commission is opposed by Sri Lankaís trade unions who fear the move will eventually lead to full privatization and cuts of up to two thirds of the work force.

The television industry too is semi-deregulated and two out of the three stations in Sri Lanka are operated by private companies. For national security reasons all broadcasting services are closely monitored by the government. The radio stations, operated by the state-owned Sri Lanka Broadcasting Corporation is yet to have any privatization plans.

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Last updated on March 6, 1996 by Ms. Nishanthi Mendis

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