Oct 28, Colombo: Sri Lanka's telecom sector experiencing a major 'pause' in its development trajectory, says a recently released report by the Research and Markets, a leading source for international market research and market data.
Following the end of the war in 2009, there were positive signs of a general improvement by 2012/2013 in the country's social and economic well-being and the telecom sector in particular is starting to build a fresh momentum, according to the report.
Pointing out that Sri Lanka's US$65 billion economy has been reporting strong economic growth of around 7% in 2012 with a record low unemployment rate, the report says that the generally improving market environment has made the country's telecom sector well positioned for continuing vigorous growth.
According to the report, the already modern and progressive telecommunications sector is certainly high on the list of priorities for further expansion and development, also fitting well with the government's wider agenda for national development.
Sri Lanka has made a good start on expansion and provision of infrastructure that is capable of providing a sophisticated level of telecommunications service to the population throughout the whole country, especially extending infrastructure into the Northern and Eastern provinces giving a high priority for conflict-affected region.
However, much still needs to be done to complete the build-out of the necessary national infrastructure, the report says.
According to the market report, after a five-year period of strong growth the fixed-line subscriber market has flattened out and then entered into a decline and 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, it notes. 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 with the mobile phone quickly becoming a popular and essential service as an effective and efficient alternative to the fixed-line networks.
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 four competing mobile operators in Sri Lanka - 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 report noted.
Sri Lanka's mobile market was set to pass 100% subscriber penetration milestone in 2013 with mobile subscriber numbers increasing fourfold in just six years.
The Research and Markets report says 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," the report noted.
Despite signs of an enthusiastic user market, coverage and accessibility have continued to be limited and the sophistication of the available services generally low, it further adds.
The level of broadband access has also been of particular concern. By 2012/2013, however, fixed broadband internet services were being supplemented by a rapidly expanding mobile broadband segment.