Sri Lanka Telecom under restructure for the second time after 1996
The Sri Lanka Telecom Group (SLT Group) is to undergo A restructuring process following the government’s decision to eliminate its inefficiency, unproductivity and less contribution for economic growth with massive overheads, although it has been considered as a profit- making institution.
The aim of the government is to restructure it making the national telecom provider as an efficient, transparent and accountable business enterprise of providing effective service delivery, Finance Ministry sources disclosed.
The SLT with 4,697 employees is currently operating with 21 trade unions and it has become a burden to the country with frequent workers protests and strikes making it difficult to the management to steer the public enterprise on a real profitable path.
It has failed to achieve the establishment objectives of ensuring the maximum return on public investment while making sure the optimum use of institutional resources as well as the ability to operate with commercially viable and independent entity.
Although SLT is making profits, its profitability ratio is very much lower than its competitors operating in the country.
The average profitability ratio of SLT during past five years was around 6.52 per cent whereas the Dialog Axiata PLC, its main competitor maintains a profitability ratio of 15.2 per cent.
Profitability ratios are defined as financial metrics used to assess a firm’s ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or shareholders’ equity over time, using data from a specific point in time.
Restructuring of SLT will be done by Public Enterprise Holding Company Ltd.
Preparations for the privatisation of SLT started in the early 1990s under “free market” economic reforms carried out by then UNP President Ranasinghe Premadasa by transforming the telecommunications department into SLT Corporation in 1991.
In 1996, it became a publicly traded company under the SLFP-led government of then President Chandrika Kumaratunga.
In 1997 the Kumaratunga government sold 40 per cent of SLT shares to Japanese Nippon Telegraph and Telephone Company (NTT). The NTT in 2007 sold 25 per cent of its shares to Malaysian Usaha Tegas Sdn, a subsidiary of Maxis Communication Bhd.
This privatisation was accompanied by mass layoffs of SLT’s workforce which had been reduced to 6,600 from 8,600 during the period 2000-2006 under a voluntary redundancy scheme, with many workers replaced by low-paid contractors.
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