Thursday 8 September 2022

Sri Lanka Mobile Operators struggling in face of Rising Operational Costs and Inflation

Sri Lanka’s fixed-line telephony market was one of the very few in the world to experience a significant upsurge in subscriptions in 2020. While the country suffers from a relatively poor fixed-line infrastructure and a correspondingly strong mobile sector, demand for traditional phone services increased 14% in 2020.

Preliminary results suggest a further jump of up to 13% can also be expected in 2021. This will take Sri Lanka’s fixed-line penetration to levels not seen since 2013.

The most likely reason behind the market’s reversal of fortunes is the Covid-19 crisis and Sri Lanka’s ensuring lockdowns. These forced much of the population back inside and reverting to ‘traditional’ methods of communication for both voice and data services. The fixed broadband market was equally robust, growing 20% in 2020 alone. Sri Lanka possesses a relatively low number of computers per household, however, so the fixed broadband market’s success comes off a small base.

The one area of the telecommunications market that experienced a fall was the mobile segment. Up until the start of the pandemic, Sri Lanka had a very high mobile penetration rate of 155%. This near-saturation level reflected the preponderance for subscribers to carry multiple SIM cards to take advantage of cheaper on-net call rates. The reduction in demand and traffic because of the pandemic led to a sharp drop in the number of active subscriptions, down to just 135% – a 17% decline in just one year.

The market was expected to bounce back again quickly, just as soon as the country eases back on its lockdown measures and reduces travel restrictions. It will also be boosted, in 2022, by the anticipated launch of commercial 5G mobile services.

Recently, The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) has approved a 20% hike in mobile, fixed voice, fixed broadband plans and VAS services, covering both pre- and post-paid customers, even though the move will up the pressure on millions of struggling Sri Lankans amid the country’s ongoing financial crisis.

This is not the first time the authorities have increased charges. In June this year, the government implemented a wave of tax reforms including a rise in VAT from 8% to 12% and an increase in the Telecommunication Levy from 11.25% to 15%.

Sri Lanka has 4 network operators:
  • Dialog (owned by Axiata)
  • SLT-Mobitel (owned by Sri Lanka Telecom)
  • Hutch (owned by Hutchison Whampoa) merged with Etisalat
  • Airtel (owned by Bharti Airtel)
2G/GSM is on 900 and 1800 MHz up to EDGE, 3G/UMTS on 2100 MHz up to DC-HSPA+ and 4G/LTE started on Dialog, SLT-MOBITEL and Hutch on 1800 MHz (B3). Now 900 (B8) and 2100 MHz (B1) is also refarmed for 4G/LTE.

Dialog Axiata, formerly known as Dialog Telecom, is the biggest mobile provider in Sri Lanka. It has the best coverage in the country at the highest rates. 4G/LTE on 1800 MHz (B3) is given out on prepaid where available without surcharge.

It's the biggest provider with almost half of the subscribers in the country. In 2020 it has covered 92% of the population with 4G/LTE and started 5G on n78 in the capital.

In March 2022 Dialog Axiata trialed a 5G Standalone (SA) network, claiming a first in the South Asian region. Having demonstrated the capabilities of the technology back in 2018, the operator has now moved to the trial phase and claimed that the deployment of 5G SA will ‘open up innumerable next-generation opportunities for enterprises and bring forth the 4th industrial revolution (4IR) that will catalyse ground-breaking innovations’.

SLT-Mobitel (formerly Sri Lanka Telecom) has a history of over 160 years, having started its operations in 1858 with the establishment of the first Telegraphic Circuit between Galle and Colombo. In the same year it established its first international Telegraph Communication between then called Ceylon, and India. 

SLT-Mobitel has expanded the footprint of its pre-commercial 5G network to the cities of Colombo, Kandy, Anuradhapura, Galle and Jaffna, offering end-users access to both mobile broadband and fixed wireless access (FWA) services.

In 2021 Sri Lanka Telecom (SLT) Group Chief Executive Officer Lalith Seneviratne confirmed that the operator was preparing to launch a ‘pre-commercial’ 5G service in mid-2021 – under the SLT-Mobitel brand – ahead of the planned allocation of mobile spectrum to support a full-blown commercial launch – which is still pending. Confirming that it is using spectrum in the 3.5GHz band, allocated by the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), for the pre-commercial launch phase, Seneviratne confirmed at the time: ‘By the middle of this year, we will have pre-commercial application of 5G perhaps with few industrial vertical applications as well’. However, the official went on to stress that as the TRCSL has not yet published any details of the allocation process, the timetable is fluid. ‘The exact time of our 5G rollout will depend on the time when the telecom sector regulator issues the licence allocating spectrum. Once the licence is issued, we will invest. We will need around one year to develop the commercial application,’ he explained. SLT-Mobitel has earmarked USD100 million for its 5G rollout in the coming years, on top of a further USD15 million to acquire the spectrum.

Hutch by Hutchison Whampoa is the 4th provider in the country giving the lowest rates for data on a reasonable coverage in the populated areas mainly. In 2018 4G/LTE was launched in the Western Province to be spread nationwide.

Hutchison has bought Etisalat in 2018 and has merged the two networks. The new entity has a combined mobile subscriber market share of around 26% making it the third largest provider in Sri Lanka slightly behind SLT-Mobitel.

Hutch has held its first 5G trial event in March 2021 at HUTCH One Galle Face Premier Experience Center, achieving a data transmission speed of 1.8Gbps, which it claims is the ‘fastest’ in Sri Lanka to date, while also achieving an extremely low latency rate. Hutch, which secured a license from the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) in February 2020 for 5G trials, is working with Chinese equipment manufacturer ZTE on the next generation platform. The ‘ground-breaking’ trial reportedly included ‘several demonstrations and use cases of 5G’, such as gaming, remote meeting, and high definition video playback.

Airtel a.k.a. Airtel Lanka, by Indian Bharti Airtel is the smallest provider in Sri Lanka and started in 2009. It has a rather limited coverage in populated areas.

The Telecommunications Regulatory Commission of Sri Lanka (TRCSL) approved Bharti Airtel Lanka’s request to shut down its 3G mobile network from 26 June 2022. In a brief statement, the industry regulator said that any Airtel customers still using a 3G-enabled device would be automatically disconnected after that date. The mobile network operator (MNO) is reportedly shuttering the network to free up precious spectrum bandwidth to further develop its 4G LTE infrastructure on the island. TRCSL has given the MNO 15 months to implement the transition smoothly, noting that Airtel must ‘absorb at least 90% of its 3G subscriber base into their 4G network during the transition phase’ subject to it. They have been conducting public awareness campaigns to encourage Airtel subscribers to migrate to the 4G network ahead of 3G shutdown and taking every endeavor to provide 4G handsets for its 3G subscribers at subsidised rates payable by instalment.

Bharti Airtel Lanka has also held its latest trials of 5G technology over its commercial network, achieving download speeds of over 1.9Gbps – the highest recorded in the country to date. The MNO’s managing director and CEO Ashish Chandra noted that the operator is ramping up its 5G capabilities in Sri Lanka and added that its 4G infrastructure around the island is fully 5G ready, allowing for ‘a seamless transition to the next generation of networking’. Airtel Lanka is using trial frequency allocations in the 3500MHz band utilising 5G Non Standalone (NSA) network technology.

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