This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Sri Lanka. Subjects covered include:
Researcher:- Peter Evans
Current publication date:- October 2014 (20th Edition)
With the end of the civil war in 2009 Sri Lanka entered what is referred to as a ‘post-conflict’ phase. There were positive signs of a general improvement in the country’s social and economic well-being by 2013/2014. And, although still facing challenges, the telecom sector in particular was starting to enter a new development phase.
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 – more than 7% GDP growth in 2013 - and the unemployment rate had hit a record low. The IMF 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. The government has been promoting such initiatives as the e-Sri Lanka project. It has also established the National Broadband Consultative Committee (NBCC), a special committee appointed to accelerate and promote the availability of affordable high speed broadband internet in the country.
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 has been 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 was for some time a positive element in this struggling sector. However, even the WLL subscriber numbers are now in decline. There is also large concentration of fixed services in the capital Colombo (penetration of 35%) which makes the national figure look better than it is.
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 with the full year delivering zero growth.) As an effective and efficient alternative to the fixed-line networks, 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. (A move by Mobitel to acquire Hutchison Lanka in 2013/2014 had not proceeded as it could not gain regulatory approval.) In 2013, first Dialog and then Mobitel launched Fourth Generation (4G) LTE services in a move that effectively lifted the countries standing as a telecom market in the region.
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 2014. 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 2013/2014, however, fixed broadband internet services were being supplemented by a rapidly expanding mobile broadband segment.
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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