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We are in an industry that must
cope with change at the speed of light. From the leisurely days
of hand cranked telephones, manual exchanges, booked international
calls and the word “wireless” was only applied to
a valve driven radio set, we are today in an era of the Internet,
palm top devices that combine telephone, camera and computer
into a single device, fibre optic cabling that delivers, voice,
data and images - at the speed of light.
A new world; with new demands and exciting new challenges.
And as I said last year, the manner in which the industry has
developed and the “no boundaries” nature of the
communications world today has made deregulation a sine qua
non.
The implications within this scenario for a company such as
SLT is that it must hit the ground running - day after day after
day; it must exhibit a nimbleness and flexibility of mind and
muscle to stay ahead; a sharpness that keeps it always on the
cutting edge of the industry.
Today’s ceiling really does become tomorrow’s floor.
I am happy to report that SLT’s performance in 2004, displays
the attributes and has achieved the results that make it a successful
enterprise within this challenging field.
Let us look at some of the Company’s achievements over
the year in review.
Looking Beyond our Shores
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After the
Wave…
At 8.27 am on the 26th of December 2004, nature unleashed
unbridled fury in the form of a tsunami of unparalleled
proportions, making landfall on the coast of Kalmunai.
A stunned nation watched as people ran for their lives
or were simply washed away to a watery death, all along
the coast of Sri Lanka, from Jaffna southwards along the
entire Northern, Eastern, Southern and South-Western seaboard
of the island.
Internationally, the tsunami ravaged Indonesia, Thailand,
the Andaman Islands, Sri Lanka, India and even reached
the East coast of Africa.
Rehabilitation and reconstruction of communities, personal
lives, businesses and livelihoods will take many years
and great
personal sacrifice.
Sri Lanka Telecom shares fully in the grief of our Nation
and other countries.
As an essential support service, SLT responded in a matter
of hours, to the crisis. We set up a Disaster Management
Centre and also within a matter of hours, established
connectivity to all essential service agencies such as
the Police, Hospitals, GA’s Offices and other local
authorities. Satellite communication facilities and wireless
phones were provided immediately to relief agencies.
By the 27th December 2004, the Company had made arrangements
for telephone facilities on a free of charge basis for
the public to convey urgent messages to relations, friends,
relief centres, hospitals etc. These facilities were set
up at the Regional Telecom Offices of Galle, Trincomalee,
Batticaloa, Ampara, Kalmunai, Vavuniya and Hambantota.
We also widened the scope of the service offered under
our ‘101’ - SLT Operator Assisted services
which provided
connectivity to relief centres, hospitals, the Police
etc.
One of the worst hit areas in the South was Hambantota,
where our tower was completely destroyed and the exchange
badly damaged by flood waters. Consequently, nearly 10,000
lines in 12 towns were inoperable.
Every day thereafter, SLT teams working round the clock
brought telecom connectivity back to town after town.
Here now is a summary of the tsunami’s impact on
SLT and the status of restoration as at the time of writing:
Impact
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Damaged
telephones - Approximately 59,000 or 6.9% of Total
customer base. |
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Damage
to Network - 2% of Total Network or 10% of Network
of
Affected Areas. |
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Estimated Revenue
Loss per month - Rs. 25 million. |
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Affected
Areas - Hambantota, Trincomalee, Galle, Batticaloa,
Matara, Ampara, Kalutara, Kalmunai, Panadura and
Jaffna. |
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Restoration
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By 7th
January 2005, approximately 20,000 or 33% of damaged
lines were reconnected. |
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Restoration of approximately
10,000 lines will take 3-4 months due to the requirement
to rebuild the locations where they were sited,
in accordance with GOSL restoration policy. |
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This year we stepped back, took
stock and identified certain initiatives that we felt would
fuel our expansion and growth in the coming years. We looked
for areas of potential in terms of revenue generation, deployment
of technology and consumer demand, with particular focus on
those areas where the Company expects industrial development
to result in increased telecommunication traffic.
This led us to look beyond our shores, to the potential that
lies in the international sphere, given our unique geo-strategic
location.
Thus we took our joint
agreement with India’s Bharat Sanchar Nigam Limited (BSNL),
which has already provided for a microwave link between Talaimannar
and Rameshwaram, a few steps further by signing up for the establishment
of an optical fibre submarine cable linking Tiruchchendur with
Colombo.
Where the microwave link facilitated voice communication through
a digital radio link, the proposed optical fibre submarine cable
will support a public telephone network (PSTN), IP Broadband
services, International Private Leased Circuits (IPLC) and Multimedia
traffic between India and Sri Lanka.
BSNL is the largest telecommunications company in India having
well over 40 million customers across that country. The relationship
with BSNL will help increase telecommunication traffic between
the two countries. More importantly, it will pave the way for
SLT to handle telecommunication traffic from BSNL towards other
international destinations, which will definitely strengthen
SLT’s position in the South Asian region.
SLT has also entered
into bilateral agreements with all Indian telecom operators
who hold international licences, including BSNL, VSNL, Bharti
Telesonic Limited, Reliance Infocom Limited and Data Access.
This move we believe will offer opportunities to increase international
and generate additional revenue.
In this regard, SLT is strategically well placed to enhance
its global connectivity capabilities with three gateway exchanges,
two cable landing stations, three satellite earth stations and
one mobile earth station. The Company also has access to facilities
and services under the SEA-ME-WE 2 and SEA-ME-WE 3 submarine
optical fibre cable consortia with whom we have membership.
In March 2004, SLT was a co-signatory with 15 other international
telecommunications carriers to collaborate on the construction
of SEA-ME-WE 4 optical fibre cable, which is a USD 500 million
collective investment and should be ready for use by the end
of 2005. SLT holds the seat of Finance and Administration in
the SEA-MEWE 4 Management Committee. SEA-ME-WE 4, an ultra modern
and high capacity undersea cable will not only assist us in
becoming an important regional player in South Asia but also
enable us to handle high volumes of telecommunication traffic
including voice, data, multimedia, etc.
The Company also pursues many other strategic initiatives that
we expect will enhance global connectivity which in turn will
facilitate capacity enhancements to segments such as multinationals
and other telecommunications operators on key international
traffic routes.
An Increasing Mobility…
Our fully owned mobile telecom company Mobitel is currently
nearing completion of the roll out of its GSM network. Targeted
for completion within the first quarter of 2005, its GSM services
will give Mobitel a coverage of the entire Greater Colombo area
and substantially all of Sri Lanka’s main cities and highways.
The new network coupled
with the planned expansion of Mobitel served to increase the
Company’s customer base by 19% going from 142,700 subscribers
as at 31 December 2003 to 285,000 customers by 31 December 2004.
Growth in the mobile market will depend upon a number of areas
including the availability of cellular capacity. Therefore we
are embarking on a phased expansion of Mobitel to suitably position
the Company to face the future. We plan to expand network across
the island to encompass rural areas, strengthen existing coverage
and increase our customer base.
Other Areas of Strength
SLT’s competitive strengths lie in several areas. We enjoy
market dominance in fixed line services, representing 87% of
such customers islandwide. Through Mobitel we reach about 19%
of active mobile customers in Sri Lanka, whilst as an Internet
Service Provider (ISP) we occupy a position of leadership.
Our fully digitalised backbone telecommunication infrastructure
extends to every region of the country, supported by its own
transport backbone of microwave links and fibre optic cabling.
Particularly in the last two years, SLT has expanded reach and
capacity substantially, enabling us to restore services in the
North and East of the country. When you add in Mobitel’s
GSM network, all these give SLT an unparalleled reach and “edge”
over the competition.
Another area of strength that has been particularly gratifying
to watch as it grew, is in reliability of service and distribution.
One of the key areas in which the SLT of years gone by suffered
was in customer service and maintenance. Today, these areas
of operation are unrecognisable from days of yore. SLT
brings to bear the fruits of state-of-the-art facilities, embodied
in a network of Outside Plant Maintenance Centres (OPMCs), 4
in the Colombo Metropolitan area and another 5 to be introduced
by 2005. OPMC takes care
of outside plant, network between telephone exchange and customer
premises. These OPMCs are serving the customer through the customer
interfaces, Regional Telecom Offices (RTOs) and Teleshops. Currently
there are 35 RTOs and 23 Teleshops in SLT’s distribution
channel. These facilities have vastly improved service delivery
to customers, whether they be new services or maintenance of
existing ones. OPMC, a fairly new concept to Sri Lanka, centralises
resources and facilitates rapid deployment to locations where
they are needed. OPMCs will eventually take over all network
expansion, new service provisioning related outside plant, preventive
maintenance and faults clearance, redefining the traditional
RTO functions. Whilst ensuring higher productivity in resource
management hence much improved customer care, OPMCs enable RTOs
to focus completely on customers’ needs and marketing
activities. This concept has paid off quite well. We are now
focussing on centralisation of resources in the transport network
where transmission and switching functions take place.
SLT’s Data and IP services has been another clear winner.
With a market share of 65%, SLT’s data services offers
a host of benefits to customers. Supported by an IP backbone
in the Colombo Metropolitan area as well as Katunayake and Kandy,
we offer domestic leased line services such as IP-VPN, Broadband
SLT Broadband, VOIP and Internet Data Centres.
SLT-iDC is our new state-of-the-art Internet Data Centre which
offers customers data housing, hosting and management services.
For organisations whose core business does not lie in IT and
to whom maintaining a separate in-house data facility as a business
support is costly in terms of technology, staffing and facility
upgrade, the new Centre provides a tailor made answer to their
needs. Outsourcing is a growing global trend and more companies
are concentrating on core business whilst looking elsewhere
for support services.
In terms of financials, we have yet again posted a revenue growth
of 15.7% to reach 29.588 billion by 31 December 2004. Operating
Profits increased by 0.5% over last year. Pre-Tax Profits were
Rs. 1.441 billion, whilst Post-Tax Profits reached Rs. 1.293
billion.
SLT is the second largest Company to be listed on the Colombo
Stock Exchange in terms of market capitalisation and with a
shareholder base exceeding 25,000, is a clear leader in the
corporate domain.
When you add SLT’s increasing strengths in the international
telecommunications arena, and the benefits derived from its
strategic relationship with major shareholder NTT Communications,
the Company assumes a clear leadership positioning.
Our New Face
Last year I commented on the creation of a new brand image for
SLT. I am happy to report that we have been on track in this
regard and are continuing to reinforce our “new visage”
as a technologically advanced, reliable and customer focussed
telecommunications service provider with a global reach both
to its customers in Sri Lanka as well as to multinationals and
other international telecommunications service providers.
The Company’s new Billing system which was introduced
in 2003 provides both customer and the Company with added benefits.
We can now combine billing for various services, provide itemised
billing on main bills and market packaged offerings and value
added services with cross-product discounts, volume discounts
and promotions.The new system also enables the Company to pursue
arrears with customers in a timely and more efficient manner
than before. Once the migration of data from the old system
to the new one is fully realised, a consistently prompt service
will ensure optimum benefits for both customer and Company.
Another area of change has been our Call Centre operation. From
a service specific multiple number system where a customer had
to dial a different number for varied needs, we introduced the
one-call concept, where a customer need dial just one of the
service numbers and get all his queries attended to. The new
concept entailed the re-training of staff and the upgrade of
infrastructure to render a streamlined, customer friendly service.
In Conclusion
I am grateful for this opportunity to acknowledge and thank
all our employees across the Company. Their minds, hearts and
brawn have carried the fortunes of SLT to another year of success
as the dominant player in communications in Sri Lanka. This
is a matter to be extremely proud of. In particular I wish to
commend the efforts of all employees who worked tirelessly to
bring the backbone telecommunications network back on track
after the tsunami disaster. I extend my deepest sorrow and sympathy
to the Company’s employees, their families and members
of the general public who were affected by the tsunami disaster.
Likewise, all our efforts have been channelled to making the
Company successful, profitable and a pride to shareholders and
the wider stakeholder community. One of our prime goals is to
offer increasing value to shareholders in terms of their vested
interests and our success is amply reflected through the content
of this report.
I would also like to thank the Chairman and the Board of Directors
for their support and contributions in taking SLT to greater
heights.
Shuhei Anan
Chief Executive Officer
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