Can you give us some background information on your company, its history and main activities?
Our Company started operations in 1991, after the liberalisation of the telecom industry in Sri Lanka. Our licence is officially the Number 1 in the telecom industry although some other companies have been in the industry and the existence of Sri Lanka Telecom has been in operation for the past hundred years before us.
Our initial service offering was to provide x.25 services and we were the first to provide these services. We concentrated mainly on data communication. When you go back to 1991 there was only Sri Lanka Telecom and their main focus was to provide telephone services. To have a telephone service at that time was a privilege and one of the fringe benefits offered when company hired an executive it was to provide a telephone service. The waiting list to receive a telephone service, after the initial registration and payment was done was immense and people have had to wait for a long period as much as two to five years. During that time the focus was to provide PSD and services and nobody provided data based services. We came to the market to provide data services and we moved forward in this sector.
The company is a joint venture with the Singapore Telecom who own 83% of the shares and there is another investor who is basically a venture capital company by the name of Capital Development and Investment Company (CDIC). Now CDIC is a subsidiary of the National Development Bank. These are the two Joint Venture partners. Initially with (X 25) services then we moved on the International leased circuits. We operate our own stations and we have what is known as the Recognised Private Operator Agency status. We have legally the right to buy capacity on Submarine cables that by pass Sri Lanka. We are operating under a fairly independent infrastructure when compared with the other providers because we have our own satellite connection and have access to fibber. As we went along we have been providing newer services from X.25, we went to international leased circuit, fax services, basically to by pass the IDD fax services and specialised fax services. In 1995 we went into Internet services. We were one of the early providers of the Internet services at that time. In the Internet services we are not well known in the country because we concentrate strongly on two segments. One is we provide direct services to corporate clients mainly; dedicated direct access services and we resell to other ISP's. We do not provide Internet services at the retail level for consumers because of that we are not well know in the market. When we provide services to corporate customers we do not use mass media advertising and other facilities as the man on the street need not know us. The uptake of the Internet services was slow at the early years. In 1999 with the booming of Internet services our international band width to the Internet was only 128 k. Today we have 9 MB and every three to six months we are introducing 4MB additional capacity and growing. From 1995 to 1998-99 the growth was very slow, every month we added about one to two subscribers. Today the demand is so great and we are unable to cope. Although the economic environment is not favourable for business, the fact is that we are unable to cope up with the demand. The reason is when we visit our cooperate customers; we offer a broad portfolio of services. Our challenge is not in terms of competition but the lack of awareness amongst the prospective customers in terms of what we provide and in terms of what they need. The demand and the requirement for our services is huge, the corporate customer does not know that we have certain solutions. Therefore they go ahead and obtain certain facilities only. One of the services we provide is the 'Web fax' service. The 'Web fax' service is very efficient. The necessity to type a fax on a sheet of paper then get a print out, get it corrected and re corrected and get to the fax machine and fax the document is not necessary. You type your fax electronically and correct and re correct on the machine and send the document through the machine by just pressing of a button using the minimum amount of time usually spent at a fax machine. People are not aware of these technologies and these are the situations we are faced with. Because of this situation marketers in Sri Lanka are more focused on product marketing. This kind of product marketing is easily done. We should not be selling an individual product like an Internet service, fax or voice service, we have to sell a solution. If we can arrest and address this situation we have no competition and the market is untapped. We see huge potential. We are going into another aspect of these services. We are building an IP network at present as our licence restricts us providing wireless services only. We do not have licence for cable access and fibre. Once the IP Network is in service we can provide multimedia service and the potential is immense. In 1991, our only customers were a bank needing multiple services and a few multinational corporations; they were the only people who could have the finances for this service. Their requirements were very simple; the bank needed a data connection to enable them feed information to the other branches and to support the ATM machines, while the other organizations just needed a connection to their Head quarters. Today the requirements of those same banks have changed where they need multimedia service where they take a Radio link or an IP link using voice data. In future we want to promote video conferencing so that people do not need to travel.
One of the tragedies in Sri Lanka is, our total infrastructure is very poor, many people including perhaps your selves will be stunned if we tell you to travel from Colombo to Kandy is 110 Kilo meters which takes three to four hours. In most countries this distance is about one hours travel time. Because of these challenges we feel that video conferencing can take off. Video conferencing is not only for international work but also for local regional work. When a company holds a meeting at their head office in Colombo and get the executives to travel from Kandy, Matara and Galle which are the main provincial towns, at least five to six hours of travelling has to be spent. Most of the time the conference is only for two to three hours and sometimes a days travelling has been spent which is a complete waste of manpower. These are senior executives travelling and it is a huge tragedy that valuable time is wasted in travelling. When talking to most of the companies in Sri Lanka, the biggest challenge is not having enough managers. If our solutions are adhered to business can be expanded at least by 50%. With the current resources in the country we can move forward. Most of these companies have many projects in hand but they do not have the qualified manpower. We as a company are trying hard to focus on these solutions. This is something different to what many people believe in.
Our Internet growth till 1998/99 was very slow because we were selling only to corporate clients. We then moved on to selling to other ISP's and to the wholesale business, which resulted in enormous growth. By going into those markets we have helped the others in the same sector to do well. When they do well we too our doing well because they take bandwidth from us. There are about eighteen to nineteen licensed ISP's operating and providing services. Of these eleven take bandwidth from us. This is the type of thing we are focusing on because what we believe very strongly is that if we all get together we can move the market. There is plenty of untapped market, if you go into a saturated market that is true, if you want to grow it is only at the expense of somebody else because you actually have to poach customers from somebody else. Now there is huge latent demand. Actually you can grow the market. If everybody is together the growth will be immense. When we do this we give opportunities to others in terms of employment and improving efficiency and many more opportunities.
| We have some plans at present which is difficult to materialise mainly because of the regulatory aspects are behind the technology. For example with Voice over IP (VoIP) technology, we can provide a significant cost reduction to the consumers in the country but the regulatory regime has not realised this as yet. We have a proposal where there are more than a million Sri Lankans working outside this country, mainly in the Middle East, Singapore, Hong Kong, Maldives and many of these people are doing blue collar jobs and they are not wealthy people. Still these people have the need to communicate with their kith and kin. Today they cannot afford it, as the telecommunication services are quite expensive relative to the income. If you take from the perspective of a developed country the cost per minute from Sri Lanka to U.S.A, or U.K., it seems reasonable but when you look at the earning power in Sri Lanka is completely impossible to sustain. What we can do with Voice over IP technology is we can provide a service where we can cut down the cost to about one third. As the regulatory regime is not conducive we cannot launch the service and give users the benefit of the lower costs. What we wanted to do is to set up telecommunication centres through out the country. We suggested to the Minister of Telecommunication that we do not need any concessions but to give us the regulatory approval for us to provide this service. We will set up the Cyber cafés in about hundred places and what we said is if Telecom is in a particular town and if they want to restrict us from providing services in those particular towns, we will not provide services in those area, but we will go to other towns as there are so many areas that have not been serviced. We will move into these areas and offer the services like VOIPs service. The quality of the service may not be as good as the IDD service, but for a person who does not have affordable access to the IDD service this will be a good move. We want to provide e-mail services at a very nominal cost where they can keep in touch with their kith and kin. This way we will be providing employment to a about four to five people at each telecommunication centre. We can encourage them to do service that no body else would do. Services like employing a messenger to send a message to a neighbouring house-hold or small way side boutiques who does not have telecommunication facilities and say that they will receive a call in a hour or two and convey the message. We can also provide a mobile phone to give it to the call receiver to receive the call. These are very good services, that we can provide to help the people who are contributing to the country by working over-seas and remitting their foreign exchange. We are not going to run these centres ourselves but plan to give the franchise to suitable people from the area itself, such as educated unemployed youth to run it. This way we can make their lives more meaningful and efficient. This way we can contribute to make the lives of the common people better by using technology in a meaningful manner. This is in a way the other side of the coin to providing Video conferencing for business to make a business more productive.
In most countries about ten to twenty percent of the population are with a voice and they drive policies of every government. The rest of the eighty to ninety percent is the voiceless population, which no one cares for. Their feelings and needs are forgotten except at election time when promises are made. With these new technologies we can make the lives of these people somewhat better. We are looking at two things; one is to provide top quality, leading edge/cutting edge technology to the corporate so that a Sri Lankan corporate can be as competitive as any body in U.S. or Europe. In the same way we could use these same technology to provide low cost services for the masses to whom traditional services are perhaps not available or where available not affordable. For example to provide a standard PSTN service via copper cable costs about US. $.1,000 per line, but with the IP technology we can provide the same services for US.$.200. Per line. We could make our cost recovery much faster even after pricing our service well below the prevailing charges. These are the services we are focussing on to move from our core-service areas. We strongly believe that we can contribute in a meaningful way to improve our country.
I agree that there is a lot of adverse publicity and lot of pessimism in the country. We have the ability to get out of this current trend. We know there is a market that we can progress and prosper in even at this point. Many people at the top have given up and they say nothing can be done but we want to break that syndrome. This is why for example we want to meet the Chairman and the Secretary of the Tourist Board. If you have travelled in the country you will see that in Sri Lanka there is immense potential in Tourism. We can help the industry in a very meaningful way. If you check into a five star hotel and tell them that you need to travel and spend your time in a meaningful way, they would suggest sending you to Kandy, Galle, the major towns and the Cultural Triangle. But many of these visitors do not know what these places look like and what other interesting places in the country they could visit. What we want to do is have most of the attractions on photograph and where possible as video clippings on the web and give them a choice to pick from. This way you do not need to print expensive brochures. You offer a general brochure with the relevant sites and go through the web and explain about the various sites. We will then have PC based systems available within easy reach such that any body could get the information from these machines.
Sri Lanka has so much to offer, in nature, wild life, scenic locations, waterfalls, cultural sites etc., but many of these sites are not too well known. The reason for us to get interested in tourism was that we found so many foreign investors coming to Sri Lanka from large corporate. These organizations send their technical and senior executives to set up business and help with the technology. These visitors, businessman and employees are sent for four to five days to complete the business and when they find a few free days they like to travel. They have fears about the war situation and when we explain that the war is two hundred kilo meters away and which takes about ten to fifteen hours to travel to the troubled areas. When they realise that business goes on as usual in most parts of the country and get a view of the real situation they are eager to travel. These is one of the reasons why we thought of introducing our business to the Tourist Board and sell our idea and provide the service mentioned.
The total background in the sector you serve, your new services. Can you give us some figures on your company, number of staff, subscriber base and your turn over last year and as a last question, if you could give our readers a last message, readers who are potential business men who will come to Sri Lanka and do business?
In terms of employees we have currently fifty-nine and we are in the process of recruiting a few more and currently the total requirement is about sixty five which we will be recruiting within the next few months.
In terms of subscriber base is quite small. It is around four thousand subscribers and these are corporate subscribers, we do not have retail subscribers. In terms of revenue, we are doing about five hundred million rupees. Profitability is quite confidential because our company is a private company.
What is your last message to our readers?
The message I would like to give the international readers is do not get carried away by the adverse publicity. Sri Lanka has a lot of potential for investment. Those who like to set up business in Sri Lanka and be successful must come over here and adopt themselves to the local environment, which may be quite different to what they experience in other countries. In terms of infrastructure they must not expect what is in the developed countries. We have people who can be easily trained and who are enthusiastic to do the job. There is immense potential in most of the areas, which have not been serviced and are hence, untapped. This is the opportunity. One must not only look at the areas that are developed. We have potential from Agriculture and related processing, manufacturing, tourism and there are many areas to be served. People who need a challenge, I tell you once again there is immense potential in this beautiful country.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions
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