Sri Lankan operators have been actively searching for additional growth drivers to offset the declining subscriber growth opportunities, according to BMI. Besides continued efforts to increase the number of postpaid subscribers, which have not been successful, companies are also looking at the nascent broadband sector. In particular, mobile broadband adoption is growing rapidly.
Although the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has yet to publish data about the country’s telecoms industry at the time of writing, data from the Central Bank of Sri Lanka (CBSL) showed that the mobile sector continued on its slow growth trajectory due to the penetration rate. At the end of September 2011, there were 18.417mn mobile subscribers in Sri Lanka, a net addition of 241,000, down from the 438,000 in June 2011.
According to the TRCSL, there were 260,000 internet and email subscribers and 120,000 broadband subscribers in the country in September 2010. The following quarter saw the numbers increased to 280,000 and 294,000 respectively. The push continued into Q111 and Q211 when the CBSL reported that the combined internet and mobile broadband subscriber figures increased to 673,000 and 692,000 respectively. At the end of September 2011, the CBSL said there were 722,000 subscribers. The momentum coincided with telecoms companies' efforts to improve their mobile data networks.
Meanwhile, after attracting interest from companies such as Sri Lanka Telecom, India's Tata Communications and Mahanagar Telephone Nigam Limited, as well as UAE-based Emirates Telecommunications Corporation in the last few years, Suntel was finally acquired by Dialog Broadband Networks (DBN), a wholly owned subsidiary of Dialog Axiata in December 2011.
Suntel’s main attractions are its fixed-wireless subscriber base of 350,000 (according to local media), of which a large portion is enterprise customers, and the 382 base stations that deliver fixed voice, broadband and data communications services using a mixture of technologies such as CDMA and WiMAX. DBN and Suntel are a good match, as the former also offers CDMA and WiMAX services. Consequently, DBN could benefit from an instant increase in network coverage and greater economies of scale. The merger would also result in lower operating and marketing expenses through the combination of their distribution networks.
The slowing global economy could hold risks for Sri Lanka, with the country’s post-war boom likely to lead to an economic slowdown - key macroeconomic trends suggest that the downturn is already well under way. Industrial production (IP) growth has gradually fallen from its double-digit peak levels duringthe back end of 2010 (when real GDP growth also hit its peak rate at 8.6% y-o-y in Q410). Similarly, export growth has collapsed, with the latest data showing growth at 20.4% y-o-y in September 2011, down spectacularly from the 72.4% high recorded in January 2011.
