The Telecomm-unication Engineers’ Union (TEU) has written an open letter to President Ranil Wickremesinghe on the proposed divestiture of the Government’s stake in Sri Lanka Telecom (SLT).

The letter was following the SOE Restructuring Unit (SRU) announcing on Friday that there were three responses to the Request for Qualification (RfQ) notice. The TEU indeed in its letter questioned the presence of only 3 bidders.

Following is the full text of TEU’s open letter to the President.

To facilitate the divestment of its shares in Sri Lanka Telecom PLC, the Government of Sri Lanka (GOSL), under the purview of the Ministry of Finance, Economic Stabilisation, and National Policies, initiated the process by issuing a Request for Qualification (RfQ) to potential investors on 10 November 2023. 

This call for interest was disseminated through both local and international media channels. The stipulated deadline for proposal submissions was initially set to 18 December 2023, and subsequently extended to 12 January 2024. 

In overseeing the divestiture, the International Finance Corporation (IFC) is doing the role of Transaction Advisor for the shares held by GOSL in Sri Lanka Telecom PLC. Remarkably, the RfQ garnered interests from only below three (03) bidders, indicating a relatively limited response to the opportunity.

1. Jio Platforms Ltd., Gujrat, India

2. Gortune International Investment Holding Ltd. c/o Capital Alliance Ltd.

3. Pettigo Comercio International LDA c/o NDB Investment Bank Ltd.

The assessment of the Request for Qualifications (RfQs) will adhere to the special guidelines on divestiture of state-owned enterprises, as officially sanctioned by the Cabinet of Ministers in July 2023.

It is imperative to ascertain the reasons behind the limited interest of only three bidders in Sri Lanka’s telecom sector. This situation sheds light on the challenges confronting the nation. Given its potential capacity, Sri Lanka Telecom (SLT) should ideally have attracted more than twenty bids. However, this did not materialise, not due to concerns about the company itself but rather stemming from investor apprehensions regarding Sri Lanka’s economic climate. There is a pressing need to reconsider and reform the existing system, establishing a framework that enables individuals and businesses to thrive based on their requisite abilities, skills, expertise, and drive.

Furthermore, there is a need for thorough scrutiny of several aspects:

• The conscious effort to disseminate and advertise this Request for Qualification (RfQ) must be questioned. It is essential to evaluate whether there has been a deliberate attempt to present the RfQ in a manner that is appealing to potential international strategic partners, fostering healthy competition at the international level. This includes consideration of major industry players such as NTT, Vodafone, SingTel, AT&T, Telenor, PCCW, Orange, Sprint, Rakuten, N2N, BT Group, TIM, Telefonica, Telstra, Spark, Verizon, Deutsche Telekom, Telus, Comcast, T-Mobile, Dish Network, Bell Canada, Rogers, Liberty Global, Swisscom, Telia, KT, SK Telecom, LG Uplus, HKT, NTT Docomo, SoftBank, and KDDI.
• An examination is warranted to determine if embassies and diplomatic channels have been effectively utilised to reach potential investors in the international market.
• The adequacy of addressing prospective investors’ experience in the telecommunications industry within the RfQ merits consideration.
• The RfQ’s specified criteria need to be assessed to ensure they are conducive to attracting a potential strategic investor. This assessment should discern whether the RFQ is genuinely designed for broad appeal or if it is tailored to cater to a predetermined investor.
• Evaluation is required to ascertain whether transparent and unambiguous clarifications have been consistently communicated to all stakeholders throughout the process.
• The prevailing general perception among investors regarding regulators and licensing authorities in Sri Lanka, across industries, is not conducive to attracting investments. It is crucial to explore the initiatives undertaken or recommendations put forth by the State-Owned Enterprises Reform Unit (SOERU) and the International Finance Corporation (IFC) aimed at establishing an unbiased regulatory framework to encourage potential investors.

Globally recognised is the pivotal role of technology as a catalyst for economic development within nations. The concepts of the digital economy, digital transformation, and the evolution of data-driven organisations stand out as central drivers in the ongoing transformative process. This digital metamorphosis has left an indelible impact on various industry verticals, spanning finance, healthcare, transportation, agriculture, tourism, manufacturing, and trade. Significantly, it is now reshaping and redefining the education sector.

To effectively propel widespread digital adoption among enterprises, governments, and individuals, it becomes imperative to implement a robust telecommunications policy framework and establish the necessary infrastructure. This strategic approach is essential to enhance and fortify the digital ecosystem within the country.

The digital economy instils a heightened sense of confidence, trust, and transparency among both investors and the public, thereby creating a multifaceted appeal for all stakeholders involved in driving economic growth. Laws pertaining to data, privacy, and cyber security are of equal importance, playing a crucial role in enhancing the policy framework essential for accelerating digital transformations.

For sustained industry progression and envisioning technological upliftment, the tax and levy regime should align with the overarching goal of economic development in the country. Currently, the digital sector’s contribution to the GDP remains below 5%, indicating room for substantial growth. Policymakers need to lend their support by establishing robust frameworks capable of propelling significant expansion in the digital sector over the next 3-5 years.

In the given context, the sought-after characteristics of an ideal strategic partner are as follows:

1. Should have a good reputation globally, especially on technology strategy. 

2. Should engage with the global network. 

3. Should bring in new knowledge to the company for expansions. 

4. Should have the ability to develop the company in competitive markets (domestic and global). 

5. Should have a market presence and demonstrable experience and expertise in telco operation and digital transformation, especially in fixed network strategy

6. Should have sound financial strength and willingness to invest in internal projects. 

7. Should have a rich corporate management culture. 

8. Should ensure national security and social responsibility. 

9. Should agree to demonstrate ethical behaviours. 

10. Should be a socially responsible corporate. 

11. Should agree to create value systems and capabilities inside the company by people-centric management and develop competencies. 

12. Should protect employee benefits and enhance employee welfare. 

13. Should build local skills and competencies to bring the country forward. 

14. Should have restrictions on foreign nationals’ employment.

Hence, even in the event of delays, the utmost priority is to identify a reputable strategic investor. It is imperative not to rush the process and risk selecting an unsuitable investor.

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