Like many other developing countries in Asia, Sri Lanka, too, is considered as an emerging telecommunications market with lots of promise. And like any other developing nation, the promise is conditional. Conditional because, even though the recipe for growth exists, its ingredients have not been put in place completely. Interestingly enough, Sri Lanka charted the telecom deregulation path much before countries like India did. Moreover, the island nation’s economy, measured in terms of per capita GDP, is more robust than that of India. But all these have not translated into a noticeable growth in the telecom sector.

Let us look at the ground realities. There is one fixed line operator, Sri Lanka Telecom (SLT), and two Wireless Local Loop (WLL) operators. As of 1 January 2000, there were 580,200 subscribers and another 236,250 on the waiting list of the partly state-owned SLT. As of 1 January 2000, 91,700 subscribers were connected to the WLL services. The main operator, Sri Lanka Telecom was partly privatized in 1997 when NTT of Japan bought a 35 percent stake in it.

This strategic tie-up resulted in NTT taking over the management of SLT, even as the government continued holding the majority stake. The privatization agreement included a provision to extend SLT’s monopoly control over all the main international switches until 2002. This meant the government going back on an earlier WTO commitment to eliminate the monopoly by 2000, besides affecting the competitiveness of other operators in the sector.

Sri Lanka allowed cellular phones in 1989, almost five years before India did, after it realized that that was the quickest way to provide phones to the island. The island’s cellular phone market is growing at 10 to 12 percent a month. There are four firms which operate cellular services in Sri Lanka — MTN Networks (Pvt.) Ltd, a joint venture between Telekom Malaysia and Sri Lanka’s Maharaja organization conglomerate, Celltel, Mobitel and Call Link. These four private companies have provided close to three lakh mobile phone connections. Private operators also provide radio paging, data communication, Internet service and satellite link-ups.

Even though the government of the day has shown enthusiasm with respect to improving telecom infrastructure as well as attracting private participation in the sector, with several policy and industry initiatives, doing business in Sri Lanka could mean coming across hurdles typical of developing markets. Take for instance this: while government of Sri Lanka representatives at the highest levels, have been emphasizing the importance of reform and transparency in policy announcements and publications on government procurement, unfortunately, procedures for bidding on major government projects and supply contracts in practice are still not transparent. Lengthy unexplained delays (of years, rather than months) are common. Competitive bids are normally reviewed by a Technical Evaluation Committee, which makes recommendations to a Cabinet-Appointed Tender Board (CATB). The CATB then makes its recommendation to the relevant line ministry, which forwards a final recommendation to the cabinet for approval. The deliberations and decisions of these different bodies are made "in secret," although information often leaks out.