Lanka Bell disconnects Dialog-Suntel merged talk of number two slot

By Cheranka Mendis

Dismissing claims that the merger of Dialog and Suntel has created the second largest fixed line provider, the rightful owner of the title Lanka Bell is now on the go to rectify the wrongful claims.

Lanka Bell Managing Director Prasad Samarasinghe told the Daily FT yesterday that even though the companies in question announced the acquisition and establishment of the second largest fixed line operation, in truth the incorporation of both networks will only put forward a subscriber base of 500,000.

However, Lanka Bell has a subscriber base of 1.3 million, Samarasinghe said. The industry has four major players - Sri Lanka Telecom (SLT) being number one has a base of 1.4 million. Lanka Bell coming in second has 1.3 million. Suntel and Dialog taking third and fourth places have 350,000 and close to 150,000 respectively. “Together it would come close to 500,000, which would not come close to our number,” he claimed.

Lanka Bell has 1.3 million listed subscribers and one million active subscribers. “From the number of subscribers point of view, we are the second largest; second to only SLT,” Samarasinghe said. “They (Dialog-Suntel) are going to create a perception among the public that they are bigger, but it is not so.”

“They are nowhere. Our question is, how can they even claim it? They cannot even come close even though they are trying to create a perception.”



There are two primary operators in the country who bring international connectivity to the country, he explained. SLT connects Sri Lanka with one international network while Lanka Bell connects the country via the FLAG international network.

“There are two major international cable networks that come into the country and provide connectivity to the country. The entry and exit point to the country is called the landing station; SLT controls one and Lanka Bell controls for FLAG. That makes these two the primary gateway operators.”

The company invested US$28 million for FLAG in 2007/2008 to get the network.

Samarasinghe said: “Everyone has to either go through SLT or us. We have a capacity and feature nobody has, except for SLT.”

Lanka Bell has also been noted as the number one broadband player with high quality by Telecommunications Regulatory Commission (TRC) for the past 12 months, he said.

With everything looking good for the company, Lanka Bell hopes to end the year with a profit close to Rs. 300 million, a number that would mark a doubling from the previous year’s profit which was Rs. 107 million. The six month report of the company shows a profit of Rs. 155 million. The Rs. 300 million is in keeping with the initial target for the year, he said.

Listing the attributes that helped the company expect such a profit, he noted that there was regulatory involvement which supported the company’s vision.

“TRC also introduced floor rates which supported the industry to survive. We benefited greatly from this as did the others. The FLAG revenue was another supporting factor. The country’s broadband and internet usage are increasing, which directly and indirectly benefit Lanka Bell.” Cost cutting and interest cost reduction were also listed as supporting factors.

“In 2012 we are looking at around Rs. 600 million as targeted budgeted profit.”

Samarasinghe stated that for Lanka Bell, profit and growth would come from the broadband segment. “The country’s broadband figure is about half a million customers today. There is huge potential in the years to come. This should grow at least three times in 2012, hitting close to 1.5 million. Altogether the potential for the segment can be four to five million customers.”

Lanka Bell’s vision is to take more shares from broadband, keeping CDMA as it is. “CDMA is giving us good revenue today and will continue doing so as we believe that the basic voice requirement of the country will not die out. In the meantime, people will need more and more broadband internet to do additional work. The need for CDMA voice will remain the same for at least the next five years.”

Lanka Bell introduced CDMA in 2005. Samarasinghe stated that to reach 1.3 million subscribers, the CDMA market was also a supporting factor.

“We came to the position of 1.3 million subscribers and second largest fixed operator status after 2005 May, where we got the license to roll out CDMA technology. With that we addressed a need that was not addressed before, the rural population’s connectivity.”

He noted that pre-2005 people beyond towns did not have access to a fixed line since the cost of extending a network was higher. “We introduced CDMA and took fixed line telephoning to the rural masses. It is those people who have taken us to this place. This is why we claim to be a truly Sri Lankan company.”

Out of the present customer base, some 80% is from the rural parts of the country.

“We made telecommunication affordable for the masses. Lanka Bell introduced the lowest call charges and continues to bring down call tariffs inline within the regulatory framework,” Samarasinghe said.

“FLAG will in the future facilitate internet and the data requirement of the country as the country grows and the need for international networks increases.”