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By Ravi Ladduwahetty

The much-awaited Sri Lanka Telecom Initial Public Offer (IPO) will open on November 25. This will also be the first instance that a Sri Lankan telecommunications company will be listed on the Colombo bourse. The issue will aim to raise US$ 40 to 50 million (between Rs. 4-5 billion), as a part of the Government's revenue target of Rs. 21 billion through privatisation proceeds for 2002.

The share issue which will see the divestiture of a 12.5 percent equity stake of the state owned telecommunications giant which is expected to bolster the operational performances of the Colombo Stock Exchange (CSE), will be held only locally when it opens on November 25, Sri Lanka Telecom, Chairman Thilanga Sumathipala told the Daily News yesterday.

Sumathipala said that plans were afoot to issue the Luxembourg traded Global Depository Receipts (GDR) as a part of the public offering to foreign investors has been postponed for 2003 as the foreign managers to the issue- UBS Warburg have advised the SLT authorities to postpone the foreign component due to the environment not being conducive to have the global issue in tandem with the local issue.

UBS Warburg has pointed out that there was a sharp plunge in global telecommunication stocks and that has been the reason attributable for the postponement of the local component to the issue, he said.

The IPO committee was due to meet yesterday to finalise the issue, despite the absence of the Chairman of the committee- Secretary to the Ministry of Mass Communications Kumar Abeysinghe who is currently at the International Postal Union (IPU) Annual Sessions in Geneva. Sri Lanka Telecom will also brief the media on November 7.

DFCC Bank is the Manager to the issue. Julius and Creasy are the legal consultants to the issue. DFCC Bank's Executive Vice President (Corporate Finance) Dayantha de Mel said that there could be some foreign investors who will subscribe to the local issue.

The financial performance of the local telecommunication giant for the year 2001 has seen an improvement over 2000. Revenue has increased to Rs. 22.06 billion, up 12.5 percent from Rs. 19.06 billion a year ago. The Operating Profit rose to Rs. 6.31 billion from Rs. 4.98 billion, up 26.7 percent between the two years. The post-tax profit has also improved to Rs. 2.5 billion from Rs. 221 million, up 851.6 percent between the two years. Connections issued by SLT for 2001 have been 794,096 up 50.9 percent from the 653,144 connections the previous year.

However, there have been reductions in the property, plant and equipment, total assets and borrowings. Property, plant and equipment has reduced 8.8 percent to Rs. 59 billion from Rs. 61.49 billion a year ago. The total assets have reduced 2.8 percent to Rs. 80.21 billion from Rs. 82.49 billion the previous year. Borrowings have been Rs. 31.67 billion, down 8.8 percent from Rs. 34.63 billion the previous year.

However, the equity has risen marginally to Rs. 36.95 billion, up 3.4 percent from the previous year's Rs. 35.74 billion. Analysts also believe that SLT's recent acquisition of the 60 percent equity stake in Mobitel which was earlier owned by Telstra of Australia for Rs. 960 million, boosted its valuation. Mobitel, which is operating on a Build-Own and Transfer (BOT) basis, is the third largest mobile operator and has 60,000 connections.

Chairman of the Stock Brokers' Association and General Manager/CEO of HNB Stock Brokers (Pvt) Ltd Devapriya Ellepola said that the issue would add a new dimension to the market with a new set of investors and that the pricing of the issue had to be correct.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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