New Capabilities for the New Generation
SLT's rich mix of sophisticated networks, access technologies and global connectivity places it on par with the world's best providers and provides a depth and range of services that no other local provider can match.

Currently our microwave copper based network and optical fibre network enable us to provide state-of-the-art services such as CDMA (Code Division Multiple Access) and SLT Broadband (Asymmetric Digital Subscriber Line). Our investments in SEA-ME-WE 3 and 4 provide unparalleled global connectivity.

Over the next few years Sri Lanka Telecom will transform its voice networks from traditional circuit switches into next generation architecture through an integrated infrastructure that will facilitate new and converged services. This migration to a NGN will put SLT on par with the world's leading telecommunications providers and once again SLT will be blazing new trails, not just in this country, but also in the larger South Asian region. The move into soft switches will enable SLT to launch WiMAX and CDMA - high speed services along with a number of other accompanying products.

Islandwide State-of-the-Art Microwave Network
SLT's current microwave network is by far the most technologically sophisticated network in the country and the one with the widest reach. It features a fully digitalised telecommunication transport network, reaching into every region of the country supported by its own transport backbone.

SLT's microwave network consists of 500 digital switching nodes with 80 master telecommunication exchanges divided into 29 area codes each served by a secondary switching centre. The secondary switching centres are in turn connected to four tertiary switching centres at Colombo, Kandy, Galle and Anuradhapura and routed to the Company's National Switching Centre in Colombo. The network supports a number of value added services such as Value-Added Services in Wireline, Abbreviated Dialling, Absentee Service, Call Forwarding Service, Conferencing Service, Hotline Hunting Service, IDD with Secret Code, CLI and Voice Mail.

New Investments in High Capacity Optical Fibre
Our fibre network is being enhanced to take over from our copper based network in the future. A future proof high-speed islandwide optical fibre telecommunications infrastructure is SLT's medium term goal.

Four Metro Rings (STM-4), one Central Ring (STM-16), part of the Southern Ring (STM-4), part of the North-East-Central Ring (STM-4) and part of the East-Uva Central Ring (STM-4) are already in service.

SLT's Optical Fibre Rings and Linear Networks have been designed to provide high transport capacity. The rings will provide around 1500 km of Optical Fibres to interconnect all provinces in Sri Lanka and ensure seamless connectivity to every corner of the country.

In support of the fibre backbone, SLT is in the process of introducing a Multi Protocol Label Switching System (MPLS), which is the next generation packet-based IP transport technology. The MPLS backbone expansion will enable SLT to spread its converged broadband services such as NGN, All-IP CDMA,SLT Broadband, Wi-Fi throughout the country. Also in the pipeline is an additional fibre ring, the high speed Optical Fibre Super Highway (STM-64) which is expected to be running by 2009.

NGN: The Voice of the Future
The introduction of the Next Generation Network (NGN) will add an entirely new dimension to our network capacity. NGN is already on trial in Matara catering to more than 10,000 subscribers. NGN is a service-driven network, which employs an open and integrated network architecture. With abundant service provisioning capabilities, NGN will be able to provide a variety of services, such as voice, data and multi-media services as an integrated service based on IP packets. Apart from the basic services, NGN service features will include Unified Communications facilities, Computer-Telephony Integration (CTI), Personal Voice Mails, IP Centrex Services, CRBT, Multi-media Services: IP TV, Video Call, Video Conferencing; Enhanced Class Features: Follow Me, Find Me, Group Ring, One Number, Dynamic Interactive Voice Response (IVR), Subscriber Control Tools and other Multi-media Value-Added Services. Initially NGN will be available in select urban areas such as Gampaha, Negombo, Avissawella, Matara and Jaffna with the potential to reach 100,000 subscribers.

Superior Access Technologies to Complement our Network Capabilities
SLT's network capability enables it to provide state-of-the-art services through the existing SLT Broadband and CDMA access technologies.

SLT's SLT Broadband Asymmetric Digital Subscriber Line) technology was launched in 2003 and currently has 13,312 subscribers.

The recent enhancements in SLT Broadband based technology have begun to make its way into the SLT Broadband deployments worldwide, opening up possibilities for new service offerings. SLT is planning on introducing SLT Broadband 2 and SLT Broadband 2 Plus both of which are enhanced xDSL versions with increased bandwidth apabilities enabling more advanced services over the existing copper lines.

SLT Citylink, SLT's CDMA network, was launched on 28 October 2005 in Anuradhapura. The introduction of CDMA is a landmark in SLT's history and will enable SLT to speedily implement its vision of rural and universal empowerment. Our goal is to build the largest and most sophisticated CDMA network that will provide state-of-the-art services to the most remote areas.

CDMA (Code Division Multiple Access) is a wireless access technology that provides superior coverage and faster connectivity. SLT's roll-out plan consists of three phases having the capacity of 150,000 customers in each phase. Presently, phase 1 is being implemented covering about 90% of the island including the North and East. Phase 1 will entail the installation of 110 sites (Base Transceiver Stations). As at end February 2006, 101 base stations were in service providing access to over 80,000 customers in 22 districts.

With consumer demand for CDMA being particularly strong in Phase 1, SLT decided to accelerate the implementation of Phase 2 immediately. Under Phase 2, SLT's CDMA network will be expanded to cater to another 150,000 lines with 100 more base stations. By the end of 2006 there will be a high quality CDMA overlay network covering the entire country with a potential capacity of 300,000 customers.

SLT Citylink currently offers several value added services such as 16 party Call Conferencing, Calling Line Identification (CLI), Call Transfer and Forwarding, Do Not Disturb (DND), IDD, Wireless Public Pay-phones, G3 Fax, Internet Access, Packet Data Services, SMS (Short Message Service) and CRBT (Colour Ring Back Tone).

An amazing bunch of value added services such as MMS (Multimedia Messaging Service), VMS (Voice Mail Service) and PTT (Push-To-Talk) will be introduced in the near future. SLT Citylink customers will enjoy not only text-based SMS but also MMS with its feature rich contents including picture, music, flash, video and their combinations. Customised Ring Back Tone (CRBT) is a new value-added service that allows the telephone subscribers to customise their own ring-back tones. With CRBT, SLT subscribers, when called, will no more respond with monotonous beeping ring-back tones but humanised response tones such as the use of a melody or the owner's own greeting.

Voice mail service will enable personalised telecommunications facilities through Voice mailboxes. The CDMA system can provide both G3 Fax and Packet Data Services. PTT (Push-To-Talk) offers a new means of fast communication with one or more individuals at the push of a PTT button on a wireless terminal. Location based service (LBS) is highly featured with world telecom trends, especially for dedicated markets such as transportation, tourism and fashionable groups. In addition to the earlier mentioned value-added services SLT hopes to introduce the advanced services such as Free-Phone Service, Voice and Packet Concurrent Service (VPCS), Wireless Virtual Private Network Service (WVPN), Message-Over IP and Wireless LAN.

Having successfully launched CDMA 2000-1X services, SLT is looking at implementing a high end CDMA service such as CDMA2000 high speed, a 3G technology to transfer high speed wireless data up to 2.4 Mbps.

CDMA high speed will enable high speed data services such as broadband Internet access, FTP, VPN, large E-mail attachments and Multi-media services. One part of the SLT CDMA network will be upgraded for CDMA2000 high speed solutions by April 2006 and will provide reliable, high performance and cost effective data solutions for high end customers and business professionals.

SLT's investments in NGN will enable the Company to soon offer WiMAX. WiMAX is a standards-based wireless technology that provides high-throughput broadband connections over long distances through the use of microwaves. WiMAX is suitable for voice, high speed internet connectivity, email, fax, data and services such as audio and video streaming. In addition, WiMAX can support other applications, including 'last mile' broadband connections, hotspots and cellular backhaul, and high speed enterprise connectivity for businesses. WiMAX will provide wireless connectivity and dispense with the need to rely on the existing copper based network.

In Sri Lanka, SLT will use the standard WiMAX which uses the 3.5 GHz frequency band unlike India, the Philippines and Indonesia which still use pre-WiMAX.

Last year SLT signed MoUs with Aperto Networks, USA and SR Telecom, Canada, to develop its WiMAX capability. Aperto Networks and SR Telecom will provide radio access and core network elements for SLT's WiMAX, and a team from SLT, SR Telecom and Aperto's engineering staff are already working together to start trial testing. SLT will be the first company to roll out a Standard WiMAX network in South Asia.

SLT's Global Connectivity: Investments for the whole Country
Over the past few years after privatisation SLT has invested considerable amount in enhancing the country's global connectivity. SLT's investments in SEA-ME-WE 2, 3 and 4 ensured that Sri Lanka is locked into the global market with the most sophisticated connectivity. SLT's investments in this area are not just enhancements for the Company and its consumers, but for the entire nation. The investments in the submarine cable are guaranteed to make best use of the country's strategic location and increase Sri Lanka's global competitiveness. In addition, it will provide access to higher connectivity, better reliability,improved security and enhanced speed.

SLT's current capabilities consist of four Satellite Earth Stations and one Mobile Satellite Earth Station (SLTFLY). In addition, it is also linked to two (or three) submarine optical fibre cables SEA-ME-WE 2, 3 and 4. The Bharat-Lanka Cable submarine link is under construction and will be operational by 2006.

SLT invested US $ 30 million on the construction of SEA-ME-WE-4 and currently has a 6% (or 400,000 MIU*Km which is equivalent to 100 x 155Mbps full links between Colombo and Singapore) stake in the multi-national consortium. SEA-ME-WE-4 will support an enhanced capacity of 1.28 terabits per second traffic capacity.

This is significantly more than the currently existing capacity of 160 gigabits per second on SEA-ME-WE-3. The improved capacity will enable further extension of the broadband capability of the IP backbone network, which will allow for higher speeds and better effectiveness in transfers between countries. Superior reliability and greater connectivity will be additional consequences of adding this cable's capabilities to SLT's existing network.

SEA-ME-WE-4 will allow Sri Lanka to exploit its geographical location to provide a significantly higher bandwidth in the future. As Sri Lanka is strategically located in the path of any future SEA-ME-WE cable, this will allow SLT the opportunity to create substantial value addition.

Fixed-Line Telephony
Despite the widespread adoption of new communication technologies, which is proceeding as quickly in Sri Lanka as it has in the rest of the world, fixed-line telephony remains the largest segment of the market in terms of connections. As new technologies are being made available at a phenomenal rate, fixed line telephony network will continue to be the delivery path for them.

Leadership in a Still-Growing Market
As the nation's premier telecom service provider, SLT dominates the fixed-line market, with a volume share that has remained in the high-eighties percentile despite inroads by other fixed-line operators in recent years. Market share in 2005 was 86%, representing a customer base of 954,060 lines.

Though market share has been relatively stable in recent years, it is worth pointing out that the fixed-line market in Sri Lanka is still far from mature and continues to grow even as alternative technologies make their mark since the teledensity of the country is low. The market grew by 9.6% in the year under review

Customer Base
	2001	2002	2003	2004	2005
Customer Base	708,200	768,620	822,922	860,468	954,060

SLT Market Share in Fixed-Lines
	2001	2002	2003	2004	2005
Market Share in Fixed-Lines	85%	87%	88%	87%	77%

Despite difficulties, SLT was able to provide 10,923 new connections in the North-East.

Despite the lures of competition, customers still tend to prefer SLT fixed-line services. SLT users made five billion call units in 2005. However, thanks to improved operating efficiencies, this increase in traffic has not resulted in proportionately greater costs to the Company. An indicator of this is the number of directexchange ines per employee, which has risen from 84 in 2001 to 130 in 2005.

Key Value Drivers
	2001	2002	2003	2004	2005
Direct Exchange Lines	708,200	768,620	822,922	860,468	954,060
DELs per Employee	84	93	115	120	130
DomesticCall Units (million)	4,464	4,706	5,004	4,304	5,202

Going Wireless on SLT Citylink CDMA
By far the most significant development in fixed-line telephony in 2005 was the launch of SLT Citylink CDMA, SLT's new Code Division Multiple Access (CDMA) service. Relying on wireless connections between locations and exchanges, Citylink requires relatively modest infrastructure and offers consumers more rapid access to a phone or data connection than conventional technologies can. For a country in which several pockets are still beyond the reach of 'wired' fixed-line technology and where demand for fixedline connections often exceeds supply, CDMA is an invaluable technology.

A planned three-phase rollout is now under way. Each phase is to make a maximum of 150,000 lines available. The current first phase has been very successful, especially in rural areas where customers have been reported to turn down competitors' offerings, preferring to wait for the Citylink rollout in their region. By the completion of the first phase, approximately 90% of the land area of Sri Lanka will be CDMA-enabled, with 116 base stationed covering most of the island.

For customers, the easy access and convenience of Citylink will be augmented by a range of value added services such as SMS, Voicemail, CLI and Internet access, comparable to those offered by mobile service providers.

Extension of Network and Services
While strengthening network access through the use of technologies like CDMA, SLT is also extending and modernising its wired network with the introduction of soft-switch-based next generation network technology. This will enhance our capacity to deliver IP-based voice, data and video services on existing lines. Meanwhile, moves are under way to extend access to the Company's fibre-optic 'backbone' from all major cities in Sri Lanka.

Voice, Data & Networking

Intelligent Solutions
The new IP service bundle, SLT Intelligent Solutions, was launched in August 2005. It is targeted at businesses that want to achieve operational excellence through reliability, speed and flexibility.

The offering features next generation communications solutions based on IP-MPLS (Multi-Protocol Label Switching) and similar advanced technologies, enabling us to deliver improved IP-based services such as virtual private networks for voice and data, SLT Broadband and broadband content hosting. The offering complements SLT's state-of-the-art Internet Data Centre, which enables customers to store sensitive data and host mission-critical applications. It also enables wideband international connectivity through International Private Leased Circuits (IPLC) over SLT's undersea cables and satellite connections.

Corporate Focus
2005 was a good year for Sri Lanka Telecom in respect of sales to the corporate sector as a total communications provider. The Company won major share of corporate WAN (Wide Area Network) projects in the financial sector, sealing deals with the Bank of Ceylon, Commercial Bank, NDB, NSB and People's Bank. Two of the country's largest and most prestigious corporates, Hayleys and John Keells Holdings, both identified SLT as their preferred telecommunications partner, while the equally prestigious Singer Sri Lanka Group selected the Company to provide both voice and data services.

Wi-Fi services proved to be among the new technologies most popular with the leisure sector in the year under review, with Jetwing Hotels being the first customer to take advantage of our Wi-Fi Hotspot technology. Other offerings popular with corporates included IP-based VPNs and Internet Data Centre solutions. Among our VPN customers were the Bank of Ceylon, Ceylinco Life, the Maharaja Organisation and People's Bank. The success of the IP VPN initiative is due in large part to our programme to educate customers on this technology and promote its popularity. The 'IP VPN Boot Camp' held in November and attended by IT professionals and systems integrators was a highly successful part of this effort.

SLT's dominance of the international communications backbone remained a major strength. Among customers for our IPLCs and international leased lines were many leading companies, among them HSBC Bank and the Call Centre, Unilever (Sri Lanka) and Virtusa.

In the public sector, key business wins in 2005 included the Ceylon Electricity Board, the Foreign Employment Bureau and several educational institutions, including the LEARN network.

Serving Small and Medium Business
SMB Sales section was formed at the latter part of 2004 to provide a focused service to cater to the needs of the SMB segment. During 2005, the section was able to achieve the given non-voice and voice sales targets convincingly.

Some of the remarkable new businesses captured by this operation include Valista International (Pvt) Limited, Colombo Stock Exchange, Kelwood Trading (Pvt) Limited, Nolimit, Capital Reach (Pvt) Limited, Asha Philiph Securities (Pvt) Limited, Nine Hearts (Pvt) Limited, Bata Shoe Co. Limited, QZ Systems (Pvt) Limited, Hela Cloathing (Pvt) Limited and Vision Apparels (Pvt) Limited.

The main objective of this section is to build and strengthen the relationship with existing and potential customers. We also plan to develop a professional, specialised sales force with required knowledge, skills and competencies to enable us to serve this segment better.

Internet Services

Dial-Up Services
Despite early advances in this market by competitors, SLT has recaptured and continues to increase its share of this sector. With a two-thirds share in 2005, the Company now enjoys a position of unchallenged dominance in the market.

SLT Market Share in Internet & E-mail
	2001	2002	2003	2004	2005
Market Share in Internet & E-mail	53%	54%	53%	61%	64%

SLT Internet Subscribers
	2001	2002	2003	2004	2005
Dial Up Subscribers	32,937	40,234	45,091	49,444	58,622
Pre-paid	-	5,431	17,231	31,007	41,407
Dediacted Internet	271	471	700	768	857
SLT Broadband - Internet	-	-	2,882	6,378	13,312

For travelling entrepreneurs, we offer an Internet Pre-paid Card which gives users access to the internet at a flat per-minute rate without the inconvenience of application, activation and monthly billing.

Services for SMBs
SLT Internet is far and away the market leader in the supply of Internet and Web-based services to small and medium-sized enterprises, with roughly 75% market share. This dominance is driven by a range of SMB-targeted products such as site hosting, mail servers for Internet cafes and high-bandwidth lines for more affordable and convenient international telephony, webcamcasts and a variety of special corporate packages. SMBs, which rarely have the funds for extensive IT networks of their own, are also well served by SLT's high-security Internet Data Centre. The countrywide network of SLT Teleshops, sales outlets and service centres makes our services more accessible to small entrepreneurs and is unmatched by any other service provider.

Serving the Corporates
SLT currently offers Internet leased lines at 64kbps, 512 kbps and 2Mbps. Mail server services, Web and Domain Name Server (DNS) hosting are other value added products for business customers. SLT also provides Internet services to most of the other Internet Service Providers (ISP). Internet services for corporates are packages in Intelligence Business Solutions which are discussed in the Voice, Data and Networking section in the Business Review.

Expanded Broadband Coverage
SLT's sector dominance is largely the result of its leadership in broadband (SLT Broadband) services, which are very competitively priced and have proved highly popular. As a result of the Company's efforts in this area, Sri Lankan customers were the first in the South Asia region to enjoy the benefits of broadband.

Since its launch in 2002, SLT SLT Broadband coverage has expanded beyond the Colombo metropolitan zone to include Kandy, Kelaniya, Maharagama, Moratuwa, Mt. Lavinia, Negombo and Ratmalana. Two packages are offered: a 'residential' package that enables downloads at speeds of up to 512kbps and uploads at up to 128kbps, and a 'corporate' package which offers up to 2Mbps and 512kbps respectively. Further additions and extensions are planned for 2005.

Online Call Waiting
Many SLT customers, especially those using dial-up connections, must choose between browsing the Internet and keeping their line free for incoming voice calls. For the benefit of these customers, SLT in June introduced a free online call waiting service, available from any SLT Teleshop or sales outlet. SLT's Web Accelerator Service provides fast access through the dial-up connection.

International Connectivity
In addition to its role as the leading telecom service provider in the country's largely deregulated domestic market, SLT is also responsible for the operation and maintenance of international telecom connections to and from Sri Lanka.

Sri Lanka Telecom is also one of 16 international telecom operators that are partners in the SEA-ME-WE-4 submarine cable system linking South-East Asia (SEA) with the Middle East (ME) and Western Europe (WE). 20,000 km of fibre optic cable was laid as part of this project, which was completed in 2005.

It is one of the most advanced of its kind in the world. The system among the most economical cable systems in the region, is built with state-of-the-art Terabit DWDM technology to achieve ultra fast terabit per second connectivity. The project will support telephone, internet, multi-media and various broadband data applications.

SLT's investment in the project amounts to Rs. 3 billion. The Company will act as the Chairman of the Financial & Administrative Sub-Committee.

In 2004, we entered into collaboration with one of the world's top ten telecom operators, Bharat Sanchar Nigam Limited (BSNL), to jointly establish and operate a 10 gigabit capacity submarine cable between India and Sri Lanka. The construction contract for this project, known as the Bharat-Lanka submarine cable system, was awarded in the year under review to the Japanese electronics and communications giant NEC. The cable is due for completion in mid-2006. The resulting increase in bandwidth will allow both Indian and Sri Lankan customers to avail themselves of new technologies and services such as international private leased circuits, broadband internet, IP services, more reliable IDD connections and so on. In particular, Sri Lankans will be able to watch their favourite Hindi movies and other Indian-made content with real-time audio and video streaming facilities for the first time.

In fact, SLT's success at upgrading and improving Sri Lanka's international connectivity have succeeded to the point where the country can now act as an international hub in its own right. In 2005, the Company signed a Memorandum of Understanding with Dhiraagu, the national telecom provider of the Republic of Maldives, on the implementation of an optical-fibre submarine cable between the two countries. As was pointed out by SLT's CEO on that occasion, SLT's existing submarine cable links connect Sri Lanka to the world, and the new cable will make it possible for Maldivians, too, to enjoy this advantage. Dhiraagu customers would see a strong improvement in the quality of their international telecommunications, with almost unlimited bandwidth to cater for state-of-the-art innovative services such as broadband, multimedia and other bandwidth-hungry applications.

To improve the efficiency and profitability of our international connectivity infrastructure, SLT recently contracted Millennium Information Technologies to implement a new routing optimisation and business steering software solution, Carrier Cockpit, in collaboration with Ascade, the well-known Swedish manufacturer of telecommunications software. Carrier Cockpit, which supports greater flexibility in the buying, pricing and selling of international traffic time, will be of particular importance in optimising the Company's returns.

Rainbow Pages' as a new Revenue Stream
SLT's Directory Services took over the total workload of publishing and distributing the the SLT Telephone Directory. As a result what was previously outsourced has now been imaginatively transformed into an income generating tool for the Company.

SLT has been publishing directories since 1930 and every subscriber is, by regulation, entitled to one. In 1983, we had only 70,000 subscribers and our directory consisted of only 280 pages. Today we have 954,060 subscribers and the directory consists of 3,760 pages. The cost incurred in publishing the annual directory is offset by the advertisements placed in the 'Rainbow Pages' - the classified business section.

The new SLT directory now contains an enhanced range of information and accommodates the telephone numbers of other operators as well. Where previously only the fixed line number was given, the new directory provides other information like mobile numbers, e-mail addresses and web sites. Information is presented in a number of different categories and we are constantly looking at ways of making it more user friendly.

The classified section - the Rainbow pages - has also been made more attractive. It contains over 1,000 classifications and our latest edition contains over 12,000 listings. A comprehensive contents page provides listings in Sinhala, Tamil and English. Colour indexing and four-colour advertisements are some other recent value additions. In addition to the paper directory, SLT also provides listings on its web site and has published directory information in the form of a CD as well. Soon we will make the SLT Directory accessible via mobile phones as well.

Approximately 972 metric tons of paper, or 49 containers, go towards the printing of the directory. SLT is exploring more environmentally friendly ways of producing the directory in the years ahead.

Support Services
SLT’s support services played their customary vital role in enabling and facilitating the Company’s business operations. On-line Procurement Process The introduction of eProcurement, a web-based supply chain management system, in August 2005 made possible the complete automation of procurement processes. In addition to increasing efficiency, the new system is more transparent and employs world best practices in procurement processes. Moreover, eProcurement has the ability to capture strategic information on procurement processes, including purchasing patterns that can be analysed and interpreted to improve the process further.

The eTENDER website provides suppliers with the up-to-date information they need to make competitive bids for the supply of goods and services needed by the Company. Since it is accessible to any web user in the world, the eTENDER site also broadens the choice of potential suppliers and frees SLT from the constraints of dependence on exclusively Sri Lankan suppliers of goods and services.

eTENDER is only one aspect of the new eProcurement system being put in place at SLT. This broader procurement system additionally covers the following areas:

• automated materials requirements planning;
• on-line purchase requests;
• generating electronic letters of credit;
• automated customs clearing;
• associated alert system

all at a single point of contact. Supplementing and supporting the eProcurement system is SLT’s new electronic document management system, eDMS, where documents related to procurement are generated, distributed, authorised, approved and archived electronically.

With the exception of automated customs clearance, all aspects of eTENDER, eDMS and the rest of the eProcurement system were completed and nearly all suppliers had migrated to the new system by end December 2005.

Improved Customer Care & Technical Support
Customer inquiries, issues and complaints are dealt with through the Company’s network of Regional Telecom Offices (RTOs). Most of these offices were established during the era when Sri Lanka Telecom was a State-owned monopoly. An initiative to improve the customer orientation and customer-friendliness of these offices commenced in 2003. It made further progress in the year under review with the opening of the first modernised RTO at Ratmalana.

The new RTO, now known as a Customer Service Centre, features a new, more efficient office layout and works as a one-stop shop for all customer needs. All SLT services, residential and corporate, are made available under one roof.

The Ratmalana RTO was the first of six new RTOs in the Colombo metropolitan area to be completed. Staff have responded positively to its clean, friendly, comfortable atmosphere, resulting in a general increase in productivity.

In the area of technical support, too, innovations have been made to improve our competitiveness and serve customers better. Two new Outside Plant Management Centres were opened in 2005 at Batticaloa and Biyagama. These centres, known as OPMCs, are responsible for the installation and maintenance of SLT technical assets in their respective regions. By bringing together a variety of human and material resources, the OPMC concept optimises customer service provision in terms of technical issues and maintenance. Between them, the Batticaloa and Biyagama OPMCs serve nearly 100,000 fixed-line connections and employ 210 staff.

Strengthening our IT Infrastructure
In October 2005, Sri Lanka Telecom entered into a contractual agreement with one of the world's leading companies, Microsoft, for the purpose of strengthening SLT's information-technology infrastructure. The agreement licences SLT to make use of the latest Microsoft technology, software packages, innovations and training components. Besides improving SLT's IT capabilities, the arrangement will also help to improve data security for the Company and its Data Centre customers.

Expanding Call Centre Operators
In 2003 we laid the foundation for a modern, customer-centric call centre to respond to the myriad queries that SLT's wide range of customers have. SLT's 'Operator Service', which originally formed the backbone of the telephone service and was established to assist the customer to make calls, has been transformed into a state-of-the-art customer-focused problem solving centre.

Restructuring and consolidating the former system into a single, integrated call centre, where the customer need only dial any of the service numbers and, irrespective of the former area of business dealt with, the SLT staff would handle any query to resolution. The staff was trained through e-learning to respond to a variety of queries and where they were unable to do so, they could channel the query to someone who could.

SLT is taking this concept into its second phase of development through the commissioning of three call centres in Galle, Kandy and Anuradhapura. Further, the upgrade will also involve the introduction of a Computer Telephone Integration system that will automatically channel customer queries to the three main areas of Fault Rectification, Billing Inquiries and Directory Information.

Mobitel
Mobitel, incorporated in 1993, was the second mobile telephony provider to enter the Sri Lanka market. Originally a collaboration between Sri Lanka Telecom and Telstra Australia, Mobitel has been wholly owned by SLT since November 2002. It is now Sri Lanka's second largest mobile operator in terms of revenue and remains the fastest-growing, wooing an ever-broadening customer base with continually expanding coverage and a suite of attractive valueadded services.

Continually Expanding Coverage
Since the rollout of Mobitel's state-of-the-art GSM network in January 2004, the Company has installed more than 400 base stations at a variety of locations across the island and is on course to achieve its target of more than 675 base stations by the end of 2006. Its coverage now extends to almost two-thirds of the country, with all major populated areas to be covered by the end of 2006.

Mobitel’s active subscriber base has grown by 48%, from a total of 284,430 in 2004 to 420,062 by 31 December 2005. This represents an approximate 19% of the active subscriber base of the mobile telephony market in Sri Lanka. The increase was driven mainly by dramatic growth in the prepaid segment, in keeping with the trend in growing mobile markets.

Strong Operational Performance
Strong growth in operational cash flow and earnings before interest, tax and depreciation were key features of the year under review. Revenue net of bad debts increased by 46%, while the bad debt percentage itself was reduced to a single-digit figure. This is attributed to the Company’s emphasis on retaining more

creditworthy subscribers in the post-paid market and to improve an efficiency in all aspects of business.

Operating profit before depreciation grew by 382% from Rs. 167million in 2004 to Rs. 806 million in 2005. However, the rapid network and subscriber growth necessitated considerable investment in technology and network expansion. The outcome was higher depreciation and interest charges, which brought about a net loss of Rs.1.1billion. This figure nevertheless represents a 6% decrease in net loss when compared to the previous year. This is typical of a growing telecommunications company and a return to full profitability is expected by the end of 2006, in spite of the high level of gearing.

Investments in Network & Technology
Mobitel currently operates state-of-the-art 2.5G GPRS/EDGE and MMS-enabled GSM network.

To date, Mobitel has invested over US$ 140 million in improvements to its GSM network. Under Stage II which is scheduled for completion by end of 2006, subscriber capacity will increase from 400,000 to 1,000,000 and more than 350 new base stations will be added. The enhanced network will operate mainly in the 900MHz frequency range, providing better coverage and penetration capability and complementing the current 1800MHz infrastructure. With dual band capability, customers are assured of uninterrupted connectivity.

Adding Value to Existing Services
In 2005, Mobitel became the first network to launch an innovative dual International Direct Dialling (IDD) solution for its subscribers. Customers have the choice of making international calls over a high quality service that offers crystal clarity, or using a low cost alternative with some reduction in quality. The services are known as IDD Premier and as IDD Buddy.

With services to more than 170 countries, Mobitel provides reliable and economical roaming for customers travelling overseas and visitors to Sri Lanka. With the introduction of pre-paid roaming for the first time in Sri Lanka along with GPRS roaming and SMS roaming , the Company's offering is unmatched in the market.

New Value-Added Services
Several new value-added services were introduced in 2005. The most popular was SMS banking which allows customers to perform a range of selected banking operations on their mobile phones. "Multividual", one of the latest features added to the network, allows the user to manage calls generated within a specially defined group to suit his own requirements. Another new service, Twintalk, enables a client to maintain two simultaneous numbers on the same phone with a single Mobitel SIM card.

Customer Care
The addition of such features is yet another manifestation of Mobitel's continued commitment to live up to its slogan, "We Care Always". A truly technology-driven Company, Mobitel strives to prove that it transcends mere customer care - in all aspects of its network, products, services and features.

Menu Driven Services (66 Services)	SMS2Email, SMS Banking, Prepaid Top-Up (Reload), Dedication, Chat, Dating, Lottery, Dictionary, Horoscope, First Aid Tips, Usage, Account Balance, Cricket, Jokes, Picture Messages, Ring Tones, Alerts etc.
WAP/ GPRS Based Services www.mobitellanka.com wap.mobitel.lk	Infotainment - SLT number search, Horoscope, News, Weather Multi-Media - Greetings, Wallpapers, Animated Games MMS Portal - Personal Album, Greetings, Cartoons, Astrology SMS Portal - Chat, Dating, Games
Voice Based Services	Scoreboard - Cricket, Rugby Rasakatha - Jokes, Bedtime Stories Kawuluwa - News, Lottery, Horoscope, Recipe, Forex