Sri Lanka Telecom to increase capex to meet 'explosive' broadband growth

Sri Lanka: Sri Lanka Telecom, the country’s largest fixed access provider said it is increasing capital expenditure which had flagged during a recent downturn to modernize its network, build broadband capacity and expand into former war torn areas.
Chief executive Greg Young said declining depreciation was indicating that its network was ageing, signaling need to “accelerate modernization” to meet “explosive data growth and broadband demand.”
SLT is state joint venture with Malaysia’s UT group.
In 2009, amid a down turn in the industry investments had been curtailed. In 2010 capital investments had been increased to 4.9 billion rupees but higher levels were planned for 2011.
SLT is changing over to a ‘next generation network’ which can handle both data and voice through packet based transmission.
“Already almost 20 percent of our customers are served by this technology, with plans to increase this to over 40 percent by end 2011,” Young told shareholders in the firm’s annual report.
The move will cut costs and improve quality and reliability of the network.
After falling during early 2009, wireline customers have grown 2.8 percent to nearly 900,000.
“Despite this customer growth, call usage of fixed telephones has continued to decline, consistent with the expected trend towards mobile services, but this has resulted in strong growth in mobile calls observed in our Mobitel subsidiary,” Young said.
“Business customers continue to show a strong preference for fixed services due to clarity, quality, safety and prestige, while our CDMA customer base and call usage has fallen as a result of customer migration to mobile services.”
The firm’s broadband ADSL (asymmetric digital subscriber line) customers had grown 36.4 percent to 213,000 by end 2010. Mobitel also had 90,000 broadband users.
The firm had increased investments in new copper access lines to cater to broad band data demand and its PeoTV service.
“We observe that more than 70 percent of our new connections are driven by broadband subscription and increasingly in the future triple play PeoTV service adoption,” Young said.
In 2010, Sri Lanka Telecom built four new telephone exchanges and 14,000 fixed wireline loops to provide voice and ADSL fixed broadband to the north and the east of the island, where a war ended in May 2009.
A fibre optic cable was laid along the A9 road running to the Northern Jaffna peninsular. SLT’s fibre optic network now connected Mannar in the north west, Vavuniya and Jaffna in the north and Trincomalee in the north east.
“With significantly low levels of penetration in these areas, we are now seeing unprecedented demand from business and the community at large, a demand which we met with speed and dedication to contribute to business growth and customer needs,” Young said.
The firm is also selling wholesale capacity to other operators. The firm had a fibre optic backbone of 8,000 kilometres and a further 4,000 kilometres would be added in 2011.