New Avenues of Growth
Mobitel entered the cellular communication market in Sri Lanka as the third mobile operator in April 1993 as a joint venture between Telstra of Australia and Sri Lanka Telecom. The joint venture was operative till October 2002 when Sri Lanka Telecom acquired Telstra’s stake in the Company. The purchase transformed the SLT Group to become the only integrated telecommunications service provider in Sri Lanka to offer both fixed and mobile communications options to its customers as well as data and IP, Internet services.

Customer Growth
Mobitel currently has over 200,000 active subscribers a 19% slice of the mobile market. Subsequent to the launch of the GSM network in January 2004 Mobitel rapidly acquired new customers and effectively doubled its active customer base. The growth in the customer base was significantly ahead of the budgeted growth rate.

Network and Technological Innovation
These customers now enjoy unparalleled customer care clarity and coverage through Mobitel's state-of-the-art GSM mobile system supplied by Ericsson AB of Sweden which is the market leader in providing network equipment to operators worldwide.

Mobitel was the first network in the world to launch a fully EDGE enabled mobile system. Through EDGE the next generation of GPRS Mobitel’s customers enjoy data download speeds approaching 3G and the Company was the first operator in South Asia to provide this service. The new EDGE enabled GPRS network will support all features such as WAP, GPRS and MMS. It will also provide state-of-the-art services such as downloading of video and music clips, video streaming, full multimedia messaging, high speed Internet access, ‘email on the move’ features, multimedia chat, rich calls, interactive games and interactive web services.

Mobitel also created another first when they introduced menu-based access for SMS based information services. Currently all other GSM operators in Sri Lanka require their customers to remember cumbersome short codes in order to access information services. However Mobitel customers SIM cards which are menu driven require the customer to click on the required information category and the SMS with the required information is sent automatically.

Also for the first time in Sri Lanka, Mobitel subscribers now have the unique facility to update new services over the air. This facility was launched at the recently concluded one-day international series between Sri Lanka and Australia when subscribers were requested to name the “Man of the series”. This quiz received unprecedented participation and the winners walked away with VIP tickets for the one-day matches and other prizes. There are other unique-eadvantages of over the air updates. Mobitel could provide new services to their subscribers and the subscribers could customise their menus without the need to visit a Mobitel Office or change their SIM Card.

Mobitel also launched its GSM service by providing its subscribers roaming in over 160 countries by using an advance roaming platform provided by Xius and using the roaming links of BPL one of the largest GSM operators in India. The license to commence an EGO operation was obtained from the Telecommunications Regulatory Commission of Sri Lanka which will give the network the ability to provide International Direct Dialling services on its own account if necessary in the future.

Value Added Services
Mobile communication in Sri Lanka has come a long way and Mobitel believes the need has arisen to promote the mobile phone not only for basic voice but also as an information, productivity and entertainment tool. In this regard Mobitel has introduced for the first time in Sri Lanka a host of services, which are all user friendly and menu driven. Currently our subscribers have access to over 70 infortainment services in nine categories via SMS.

Awards
The use of technology to drive new services and product offerings has resulted in the Company being recognised internationally as a technology leader. Recently at the GSM Congress in Cannes the GSM Association of Russia gave an award to Mobitel for its Roaming solution using the Xius platform. Mobitel was recognised with two other awards by Schlumberger the worlds leading manufacturer of SIM cards for implementing and Over The Air Platform which updates the customers SIM card automatically and by Convergys for one of the fastest implementations of the Geneva Rating and Mediation System. The international recognition of Mobitels achievements has not been limited to the sphere of technology. Mobitels financing arranged by Standard Chartered Bank for the GSM roll out won an award from Asia Money as one of the most innovative trade financing arrangements for the year 2003.

The Mobile Market
The Market of the Future
According to Central Bank statistics there are close 1.3 million mobile customers in the country. This is larger than the fixed line base, which amounts to 900,000 subscribers. The cellular market has seen a compound average growth of 62% over the last decade. SLT is aware that the mobile market exhibits huge potential, the surface of which has barely been scratched. Mobitels phenomenal growth subsequent to the GSM launch ratifies the decision taken by SLT to enter the cellular market and is expected to be the main source of the companies growth of profits in the future.

Creating an even better Service
Over the next few years Mobitel anticipates investing US$ 200 million or Rs. 20 billion in technology and network upgrades. Already close to US$ 88 million has been invested in upgrading Mobitel in a little over a year. Subsequent to the takeover by SLT keeping in line with principles of good corporate governance a comprehensive review was carried out of the procurement policies of the Company. The GSM supply contract was evaluated with external consultants actively participating in the evaluation process to ensure that the companies’ objectives were met. Detecon a subsidiary of Deutche Telekom audited the technical evaluation and recommendation while the financial evaluation was based on World Bank recommended evaluation methodology and audited by the global accounting practice. The evaluation of the financing of the GSM network was structured in consultation with DFCC Bank to ensure the lowest cost of funds. Because of the large capital outlay for the GSM project and the need to fund the expansion through debt, procurement practices were strengthened with added emphasis on cost control. This resulted in significantly reducing the anticipated loss arising from the launch of GSM service.

By the last quarter of 2004 we expected to consolidate on Mobitel's achievements and provide seamless uninterrupted coverage islandwide, which would link the current coverage in major towns and highways with more rural areas and the North and East of Sri Lanka. Mobitel will continue to roll out new services and innovations in keeping with the technology leadership position established by the Company while ensuring the financial stability and prospects of the Company are optimised.