Financial results for the nine months ending 30th September 2009

SLT group maintains revenue growth

Sri Lanka Telecom, the incumbent telecommunications service provider released its financial results for the 9 months ending 30th Sep. 2009. The group remains positive about the results that have been delivered under challenging economic conditions that continue to prevail and the ongoing intense competition in the Sri Lankan Telecommunications industry, which combined have impacted the overall results of the group.

Revenue

The group revenue for the 1st nine months of 2009 has grown by 2% to Rs. 35,890 million from Rs. 35,049 million during the same period in 2008. Mobile and Other Revenue segments have positively contributed to this growth, a demonstration that our diverse portfolio of services across the group serves us well. The recent introduction of new flexible and innovative price packages for PSTN & CDMA fixed customers has positioned these sectors against the competitive pressure, however the revenues from PSTN and CDMA segments have dipped, as the Company expected.

SLT, the only wire-line broadband service provider in Sri Lanka, continues to focus on its broadband strategy of driving and capturing growth in this important sector, which positions us well to deliver additional information and entertainment services now and into the future. During the period under review the broadband segment revenue has grown by 12% as the ADSL customer base continues to grow. The company has taken several measures including the introduction of new price packages to increase the customer base.

Introduction of the SLT PeoTV (IPTV) service further leverages and drives the demand for broadband ADSL service. Furthermore through its subsidiary Sky Networks, SLT is moving to introduce wireless broadband service also, a further expansion of our diverse access network strategy.

Through the introduction of the new fixed telephone packages and a focus on customer service & retention through new value added services, SLT has focused on our existing fixed line telephone customers.

Operating Expenditure

During the 1st nine months of 2009, the group operating expenditure has increased, by 25% to Rs. 22,233 million compared to Rs. 17,842 million of the same period of previous year owing to high inflationary factors and increase of advertising and sales commissions of Mobitel in line with the increase of their sales.

The Company has been able to maintain the operating expenditure at Rs. 15,101 million during the 1st nine months of 2009, when compared to the same period of 2008. This is a 13% increase.

Depreciation

During the 1st nine month of 2009, the group depreciation has grown by 9% to Rs. 8,234 million from Rs. 7,546 million of the same period of 2008, due to the impact large investment of Mobitel for their Service expansions.

There has been a dip in depreciation of the Company during the period under review by 1% to Rs. 6,128 million compared to Rs. 6,182 million of the same period of 2008.

Voluntary Retirement Scheme (VRS)

Aiming of cost reductions, opportunities to bring-in high skilled and active labour the Company continues to invest in Voluntary Retirement Schemes (VRS). Compared to Rs.370 million of the year 2008, Rs. 480 million Has been distributed among about 300 employees who opted to enjoy benefits of the VRS during the year 2009.

Company Transformation

Sri Lanka Telecom has recognized that the company should be changed in line with the various changes that have taken place in the market place. Technologies are constantly changing, competition is high, the