In the interview published on 4 September titled ‘Adopt multiple approaches to reform SOEs,’ featuring Prof. Rohan Samarajiva, certain facts relating to SLT-Mobitel are grossly misleading.
Excerpts from the above interview compare SLT-Mobitel with a telecommunications operator in Sri Lanka and state that SLT-Mobitel’s return on assets ‘is considerably lower’.
SLT-Mobitel transitioned from a government entity to a Public-Private Partnership (PPP) in 1991 and was identified to be a successful role model for the State sector and has consistently generated profits throughout its history.
The comparison of a telecommunication operator against SLT-Mobitel in terms of return on assets in the article is misleading as the two businesses have a vastly different asset base. The said telecommunications operator is only a wireless operation, while Sri Lanka Telecom’s operating model is historically a terrestrial one with inherited real estate properties from an older era. The telecommunications operator compared with SLT-Mobitel in the article does not have such assets.
However, with a transformed new business model, SLT-Mobitel’s assets are being utilised to further diversify the business as these assets remain within the company.
SLT-Mobitel’s new business mThe interview further, after comparing a parameter for two very different operating models, misleadingly states, ‘That means it is not managed properly’. However, the interview fails to consider the other indicators that demonstrate the efficiency and profitability of SLT-Mobitel. For example, if market capitalisation is compared, SLT-Mobitel leads in this indicator. (Rs. 92 billion) as at 5 September 2022.
SLT-Mobitel’s Return on Investment (ROI) as of Juodel occurred because of its new technology adaptation. This enabled SLT-Mobitel to offer services such as a high-speed fibre network across the island, which drastically reduced the organisation’s dependency on assets such as real estate. The company is in the process of monetising these real estate assets through different business models to ensure they yield revenue to the organisation.
ne 2022 is also at a very healthy level. Return on Equity (equity shareholders’ perspective) is 10% for the group and 23.9% for the company. Meanwhile Return on Capital Employed (equity shareholder and loan holders’ perspective) is 7.5% for the group and 15.2% for the company. SLT-Mobitel is also the only telecommunications industry operator to post a profit during the first half of this year.
SLT-Mobitel is a prime example of a robust Public-Private Partnership in Sri Lanka. Initially operating as a government department, SLT transitioned to a publicly listed company and today is a high-performing corporate entity in the country.
The two major shareholders of Sri Lanka Telecom PLC (SLT) are Global Telecommunications Holdings N.V. (GTH) holding a 44.98% stake and the Government of Sri Lanka holding a 49.50% stake through the Secretary to the Treasury. The remaining 5.52% of shares are publicly traded on the Colombo Stock Exchange.
The company has paid Rs. 1.8 billion in dividends and Rs. 19.3 billion in direct and indirect taxes to the Government of Sri Lanka for the year 2021. To date, the organisation continues to post profits despite challenging socio-economic conditions in the country and is a non-liability to the Treasury.
Its revenue is further repurposed to strengthen islandwide network infrastructure and expand connectivity and communication needs of the country as per national digitisation and development plans. The organisation further offers network bandwidth and capacity to all telecom operators in the country.
SLT-Mobitel, an example of a successful PPP
11 Sep 2022
SLT-Mobitel, an example of a successful PPP
11 Sep 2022