Telecom and the Sri Lankan economy

Sri Lanka is streets ahead in telecommunications especially in the mobile telephony arena compared to other countries in the Asian Region, according to Dr. Hans Wijayasuriya, Executive Director/CEO of Dialog Telekom who was The speaker at the monthly meeting of The Sunday Times Business Club meeting held at the Trans Asia Hotel last month.

He was speaking from the business perspective of the telecommunication industry in line with what telecom means to Sri Lankan lives, businesses in Sri Lanka, what it has done for and what it can do for the Sri Lankan economy.

Taking a look at the background of telecommunications in Sri Lanka, the industry today consists of four mobile operators with a 5th operator on the way, 1 fixed line operator, 3 CDMA operators the last of which is to be launched shortly by Dialog CDMA. There are currently 32 international operators that provide services to Sri Lanka with 1 pay phone operator and 23 Internet Service Providers.

In terms of telecom KPIs of a country, generally referred to per capita usage of telephones, Sri Lanka has done extremely well considering the fact that as of date there is a 25% mobile phone usage penetration which is approximately five million out of a population of 20 million which puts Sri Lanka ahead of regional counterparts.

It is also interesting that more than 80% of the five million users actually spend less than Rs 400 per user (per month). In terms of coverage and population reach, once again Sri Lanka has done extremely well compared to other countries in the region, Dr Wijayasuriya noted.

“I believe this success is due to the fact that the Sri Lankan mass market approach was adopted somewhat ahead of our regional counterparts,” noted Dr Wijayasuriya who also went on to say that Sri Lanka has actually been ahead of countries such as India and Bangladesh in terms of telecommunication infrastructure and usage.

Liberalization and privatization has been a hallmark of the telecom sector where good government policies along with a strong private sector supporting such policies. With the entry of the first mobile operator in 1989 and the fourth operator in 1994, the number of operators in the mobile sector matched that of countries such as UK and also most European countries which meant that the level of competition was way ahead of the times.

Competition between ISPs and data circuit segments started in 1993 which has resulted in 23 licenses being given out as of date. Interestingly 3G services are getting off the ground in Sri Lanka yet again ahead of regional countries and the momentum is expected to grow which will ultimately contribute towards a stronger Sri Lankan economy. The mobile sector is clearly the “engine of telecom growth,” noted Dr Wijayasuriya adding that 54% of growth in the total telecom sector since 2000 came from the mobile sector in spite of macro economic challenges. Amongst the predominant challenges at the time was the war which was at an aggressive level at the time and most probably one of the most uncertain times in Sri Lanka.

“The turning point came in 1997/98 where suddenly the telecom growth the trajectory in Sri Lanka suddenly outstripped the entire South Asian Region and Sri Lanka continues to lead in terms of penetration.”

According to Dr. Wijayasuriya, the turning point of mobile telephony taking off in Sri Lanka was due to the country taking the correct decision in the application of mobile telephony in an inclusive manner as opposed to an exclusive manner. The inclusive approach involves making technology affordable to as many as possible and such a philosophy is needed for a telecom operator to survive, he noted.

Giving an interesting insight into the operations of telecom operators and how they structure themselves to provide a return on investment to the shareholders as well as making products affordable and available to many as possible, it was pointed out that Sri Lanka as a country has plenty of needs and plenty of people.

All of these put together make available huge opportunities for which products can be made available which offers large business volumes.

Business plans of Dialog GSM way back in 1995 had been ambitious where other mobile operators had been cautious in their investments, however Dialog eventually showed the way and the rest had joined which has resulted in the mobile telephony market in the country being very competitive and vibrant.

Dialog was the first GSM network to be launched in South Asia way back in 1995 and the success story of Dialog also has been due to them recognizing that “wealth is at the bottom of the pyramid,” noted the Dialog chief further pointing out that this is a fundamental truth and most successful companies today have addressed this correctly.

It is interesting and amazing to note that Dialog being the largest market capitalized company in Sri Lanka, the capitalization comes from the normal citizen of the country, the Sri Lankan consumer. It is a fact worth being made seriously note of by other companies.

Internet penetration in Sri Lanka is extremely dismal compared to other countries in the region and though theories exists such as cost of telephone charges, etc… it can be mainly attributed to normal consumers that do not perceive any marginal value that can be extracted from the Internet.

Drawing the attention of the audience in parallel examples of how the Internet could bridge the “rich and poor gaps” as well as “geographic gaps” and on how a higher level of Internet penetration could be achieved, Dr. Wijayasuriya said that “Sirisena in the village needs to believe that by having a computer in his house, his child is closer to becoming equal with a youngster in Colombo. The day he believes that, Internet penetration would take off”.

It was evident from the presentation made by Dr. Wijayasuriya that Sri Lanka has much to be proud of in terms of what the country has achieved in terms of technology also considering the vast opportunities available for businesses in Sri Lanka. The fact that Sri Lanka is ahead in the South Asian region means Sri Lankan businesses have much opportunity for growth utilizing technology.

The Dialog chief also provided an insight into technologies which will change the lifestyles and the way ‘we’ do business within the next few years such as convergence of media space, high speed mobile connectivity, etc…. which spells out an exciting era ahead for Sri Lanka and most importantly the Sri Lankan consumer. The meeting, which drew a record crowd of members and special invitees, was held at the Trans Asia Hotel, the host of the club.