S.Lanka Telecom puts faith in pay-as-you-go, CDMA

COLOMBO, Apr 7 (Reuters) Sri Lanka Telecom believes CDMA wireless phones and new pay-as-you-go contracts from its mobile operator Mobitel will drastically boost its subscriber base, the company said on Friday.

The firm's revenue more than doubled in 2005, and while chief executive Shuhei Anan said it was too early to say if that could be repeated in 2006, the company expected to see much more dramatic growth in subscriptions than in previous years.

''This is a very big changing period,'' he told Reuters in an interview in SLT's Colombo headquarters, once the Ceylon Telegraph Office. ''We are more than on track. We expect our number of users to increase dramatically.'' Sri Lanka Telecom is one of the largest listed stocks on the Colombo bourse with some 12 percent of the firm listed. It is 49.5 percent owned by the Sri Lankan government and 35 percent by Japan's Nippon Telegraph and Telephone Corp .

Anan said he thought it unlikely those proportions would change, that the company had strong cashflow and that it would be unlikely to repeat its 2004 0 million bond issue in the near future.

Its stock has risen around 14 percent so far this year, compared with a 23 percent gain in the broader market, which has been buoyed by a lull in violence ahead of government peace talks with Tamil Tiger rebels.

Land-line subscriptions had grown by 5-6 percent over the last few years, Anan said, but he expected CDMA usage to increase much faster -- from 100,000 users now to at least 200,000 by the end of the year.

Sri Lanka Telecom uses CDMA, the dominant cellphone technology in the United States, to run wireless phones particularly in rural areas which may not already have established land-line networks.

TIGERS SPURN WIRELESS Its wholly owned mobile phone operator Mobitel, currently running at a loss over the costs of converting to GSM, had just started selling pay-as-you-go contracts and expected to increase its number of users from 500,000 to 800,000 by the year end.

Asked if he expected Mobitel to return to profit by the year end, he said ''definitely''.

''Mobitel is currently one-tenth of our total revenues,'' he said. ''By the end of this year I hope it can become one-sixth or one-seventh.'' Sri Lanka Telecom's land-lines are the only phones operating in areas held by the Liberation Tigers of Tamil Eelam (LTTE), de facto rulers of a seventh of Sri Lanka since a 2002 truce halted two decades of civil war.

But while the Tigers were allowing a fibre-optic cable to link the army-held Jaffna enclave to the rest of the island, there was no prospect of them allowing wireless or mobile services there, he said.

''They are very scared to provide wireless services, they cannot identify who is using it and where they are,'' he said of the rebels. ''All in all they only want us to provide a wired line.'' REUTERS CS PM1436