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Message: <blockquote data-quote="DJ SAMPATH X" data-source="post: 8870781" data-attributes="member: 35982">In this quarter’s update of the Sri Lanka Telecommunications Report, BMI has revised extensively its forecasts for the country’s fixed-line, internet and broadband services markets, in the light of new data received by the national regulatory authority, key operators and industry associations. We have not made any changes to our forecasts for the mobile market, mainly because of a lack of verifiable Q110 data from four of the country’s five operators, even those that usually report fairly detailed results.We have substantially downgraded our forecasts for fixed-line growth in Sri Lanka, after the regulator reported a net decline in lines in service for YE09. While there had been some positive growth in the year, the cumulative effect of fixed-mobile substitution, the disconnection of ageing PSTN accesses and the closure of some operators’ wireless local loop (WLL) connections more than offset new line activations and operators’ moves to install new lines in the north of the country following the cessation of hostilities in 2009. We now believe that each of the next five years will see nominal positive growth, in contrast to our previous forecasts for steady increases to 2014.There is some overlap with the success of broadband in recent times, as both PSTN and CDMA WLL connections are increasingly being used to deliver broadband services to Sri Lankans. New data show that fixed broadband connections grew less strongly in 2009 than had been expected, but the market was bolstered by growing interest in WiMAX and 3G/3.5G mobile telephone networks for broadband access. Data from the Central Bank of Sri Lanka suggest that there were 70,000 WiMAX/3G subscribers at the end of 2009 which, when added to fixed broadband subscriber numbers, pushes up our growth forecasts quite significantly. We now expect broadband penetration to reach 21.3% by the end of 2014, up from 1.2% at the end of 2009.The new mobile broadband data has given us the opportunity to begin forecasting 3G service usage, too. Previously, we had not been able to begin forecasting for 3G on the understanding that, despite having been launched in 2006 and despite intense investment by operators in HSPA technology over the last two years, the high costs had weighed against mass market takeup of 3G services. The price wars of 2009 helped to make 3G services more affordable, and we believe there were 95,000 3G subscribers at the end of the year, representing 0.7% of the mobile market as a whole. We expect 3G to account for just 2.5% of the mobile market by 2014, a clear indication that affordability remains a major hurdle to mass market adoption.</blockquote>

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