Monday, April 23, 2007

Sri Lanka telco earnings to be boosted with rural telephony subsidies

Incumbent Sri Lanka Telecom (SLT) will get the largest slice, boosting its 2nd quarter earnings by up to three billion rupees.

Other telecom operators who channeled calls through their international gateways will collect two billion rupees.

International Telecommunications Operators’ levy or ITL is charged at three rupees and 80 cents per incoming minute from external gateways.

Although there are many licensed gateways, only ones owned by telecom companies actually bring ITL revenue generating traffic.

Operators were unable to tap the fund because the telecom regulator had not decided on the basis for its distribution till last week.

Telecom operators are able to reclaim two thirds of the money they pay to the “international telecom operators levy” to finance rural rollout.

The telecom regulator says cellular and CDMA operators can reclaim the cost of towers in all districts except for the main city in that district.

Fixed line operators can claim twenty-five thousand rupees for every wire-line connection.

However no claims are possible for rollouts in the Colombo district.

Telecom regulator Kanchana Ratwatte, however, did not say how the other one-third of the ITL fund will be distributed.

Incumbent SLT didn’t transfer the funds to the ITL but gave reports on its network rollout to un-served and underserved areas.

However, it was also unable to recognize the money in its financial statements without TRC formula for its redistribution.

SLT’s windfall will be unmatched but other mobile operators Dialog Telekom, Celtell and Hutch will also get some refunds.

CDMA technology phone operators SLT, Suntel and Lanka Bell will also benefit from the refunds.

The telecom regulator did not say how much the ITL fund had collected in the three years since it was launched but SLT’s contribution to it tops 6.3 billion rupees, according to the company.

The regulator’s announcement comes on the back of a due diligence underway by Malaysian Global Telecommunications Holdings to buy out a part of the 35 percent stake held by NTT of Japan.

SLT made 5.4 billion rupees last year.

Stock analysts are forecasting 6.5 billion rupees in earnings for this year, a figure that’s now likely to get closer to 10 billion.

Telecom operators who rolled out rural networks in the last three years will get a five billion rupee refund of levies collected from every incoming international call minute.

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