2013 Sri Lanka - Telecoms, Mobile, Broadband and Forecasts

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Last updated: 14 Oct 2013 Update History

Report Status: Archived

Report Pages: 82

Analyst: Peter Evans

Publication Overview

This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Sri Lanka. Subjects covered include:

  • Key Statistics;
  • Market and Industry Overviews;
  • Regulatory Environment;
  • Major Players (fixed and mobile);
  • Infrastructure;
  • Mobile Voice and Data Market;
  • Internet, including VoIP;
  • Broadband.

Researcher:- Peter Evans
Current publication date:- October 2013 (19th Edition)

Executive Summary

Sri Lanka’s telecom sector experiencing a major ‘pause’ in its development trajectory

With the end of the civil war in 2009 Sri Lanka entered what is referred to as a ‘post-conflict’ phase. By 2012/2013 there were positive signs of a general improvement in the country’s social and economic well-being. And the telecom sector in particular is starting to build a fresh momentum.

Over the past few years the Sri Lankan economy has rebounded from the difficult state it was experiencing back in 2009. The country had been hit by a balance of payments crisis in that year and needed a US$2.6 billion IMF loan to bail it out. Since then, however, the US$65 billion economy has been reporting strong economic growth - around 7% in 2012 - and the unemployment rate had hit a record low. The IMF has forecast annual growth of 6%-7% in the short term.

The generally improving market environment has seen the country’s telecom sector well positioned for continuing vigorous growth. The already modern and progressive telecommunications sector is certainly high on the list of priorities for further expansion and development. This also fits well with the government’s wider agenda for national development.

A good start has been made on expansion and provision of infrastructure that is capable of providing a sophisticated level of telecommunications service to the population throughout the whole country. Extending infrastructure into the North and Eastern provinces, those parts of the country most affected by the long-running war is being given high priority. It is well recognised that the growth and development of any country’s telecom sector is necessary to provide, among other things, an impetus for national economic activity. Nevertheless, much still needs to be done to complete the build-out of the necessary national infrastructure.

After a five-year period of strong growth the fixed-line subscriber market flattened out and then entered into a decline. Considerable uncertainty hangs over this segment of the telecom market. The widespread application of the Wireless Local Loop (WLL) platform has been one positive element in a struggling sector. There was a large concentration of fixed services in the capital Colombo which has a penetration of 35%.

In the meantime, the country’s mobile telephone services have continued on a positive growth path. (The subscriber numbers appeared to have experienced a ‘correction’ in the first half of 2013.) As an effective and efficient alternative to the fixed-line networks, with their earlier problems in meeting the demand for telephone services, the mobile phone quickly became a popular and essential service. The Sri Lankan mobile market was still growing at an annual rate of around 50% in 2009 in as it headed towards the 60% penetration mark. However, since then subscriber growth has moderated to less than 10% per annum. The country’s four competing mobile operators – Dialog Axiata, Mobitel, Etisalat Sri Lanka and Hutchison Lanka – have been joined by a fifth operator, Bharti Airtel Lanka, adding vigour to an already highly competitive market.

The development of the internet remains of particular concern for Sri Lanka. In a country whose population is increasingly undeniably internet savvy and the government rhetoric positively supporting the nation going online, the estimated user penetration remained relatively low coming into 2013. Despite signs of an enthusiastic user market, coverage and accessibility have continued to be limited and the sophistication of the available services generally low. The level of broadband access has been of particular concern. By 2012/2013, however, fixed broadband internet services were being supplemented by a rapidly expanding mobile broadband segment.

Market highlights:

  • Sri Lanka’s mobile market was set to pass 100% subscriber penetration milestone in 2013.
  • Mobile subscriber numbers had increased fourfold in just six years.
  • The leading mobile operators had been trialling Fourth Generation (4G) technologies in preparation for commercial launch.
  • After a sustained period of healthy growth, the country’s fixed-line market had undergone a levelling off and suffered a significant decline in 2012.
  • Fixed-line expansion has been boosted by the extensive application of CDMA-based WLL technology; WLL services comprised a majority of the total fixed line subscriber base by 2012.
  • The country’s internet sector remained underdeveloped, with the take up rate of broadband services being especially low; there were however signs that this was starting to change, especially with the surge in mobile broadband services.
  • Fixed broadband penetration (as a percentage of population) was still less than 2% in early 2012.
  • The government established the National Broadband Consultative Committee (NBCC) in 2010, but there was little evidence of it having any great impact to date.

Sri Lanka - key telecom parameters – 2011 - 2013

Category

2011

2012

2013 (e)

Fixed-line services:

 

 

 

Subscriber penetration (population)

17%

17%

14%

Internet:

 

 

 

Fixed subscriber penetration (population)

1.7%

2.0%

2.2%

Mobile services:

 

 

 

Subscriber penetration (population)

87%

99%

100%

(Source: BuddeComm)

Data in this report is the latest available at the time of preparation and may not be for the current year

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