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Sri Lanka Telecom Group, the success story of a once state owned enterprise

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Here below is the speech made by Rohan Fernando – the Chairman SLT Group -addressing the CMA forum comprising of a gathering of professionals from South Asia.

Good Afternoon,

Professor Lakshman Watawala, President, Institute of Certified Management Accountants of Sri Lanka and Mr. Hennayaka Bandara, Vice President of CMA, Delegates from the SAARC region Management Accounting bodies,
Distinguished guests,  Ladies and Gentlemen.

When Professor Watawala invited me to address the CMA forum comprising of a gathering of professionals not only from Sri Lanka but also from South Asia, I was perplexed. 

But when I understood the subject, the transformation of SOE’s, it gave me courage to discuss and share the experience of Sri Lanka Telecom Group’s transformation from an SOE to a public private partnership and one of the best performing Companies in the Colombo Stock Exchange. 

As the Chairman of the SLT Group I am proud to stand before you to affirm that our company is a role model for nation building maintaining its primary role as the national telecommunication provider whilst, contributing handsomely to the exchequer in direct and indirect taxes as well as dividends on profits. 

We are gathered at an extremely crucial time, to discuss how Sri Lanka as a nation can build back better by adapting to changes, however drastic they may be in transforming or restructuring and depoliticizing the loss making government owned businesses and transform them into self-sustaining profitable institutions to ease the burden on the state coffers which could help ease the financial crisis we are currently experiencing.

I stand before you proudly acclaiming that our 160-year old company continues to make revenue for the country without being a burden to the government or the citizens of the nation. In 2021 alone we contributed 19.3 billion Rupees of direct and indirect taxes. Additionally, our shareholders including the Government Treasury reaped rich dividends of Rs 3.5 billion.

We have instilled good governance and utmost discipline in our activities with sustainable goals through the ESG protocols. These are now widely practiced globally for Integrating Environmental, Social, and Governance Frameworks giving a true meaning to Corporate Social Responsibility or CSR by the way we treat our planet, integrating with society for social justice and adhering to a strict code of Governance on accountability and transparency. 

SLT or Sri Lanka Telecom began its operations as Ceylon Telegraph Company in 1858, over 160 years ago as a state-owned national communications service provider with a monopoly on telephone connectivity. it’s transformation from a state owned entity to a public listed company happened in the 1980’s with the opening of the telco industry to the private sector and today there are four other major telco companies with foreign control operating with SLTMOBITEL on a level playing field. 

Looking at Sri Lanka and the opportunities before us – the demand for connectivity has never been more important to keep life moving forward. 

We have the best potential to transform our country to a Smart Nation, making innovative technology the backbone of every sphere of activity. Future-focused technology and digitally empowered citizens can change and grow the nation to not just survive but thrive in the future.  

However, before we chart our course towards rebuilding and transformation, we must overhaul our archaic legacy systems, reduce inefficiency, and eliminate corruption and heavy operational costs. We also need to reduce waste in critical sectors and services which continue to pose immense challenges for the nation’s sustenance.

Crises are generally associated with danger and destruction with a heavy cost attached to it. But when we look back, history has shown us that crises can be useful for re-directing people, to think differently to unearth new ways of doing things by challenging the norm. In an institution, this can only be achieved by building trust amongst the staff to get them on board to accept and be partners in the process of transformation. This is exactly what we did at the SLT Group during the last three years to prime our business with new strategies and cost effective solutions.

The brand unification initiative of SLT-MOBITEL in 2021 brought together the best services of fixed and mobile technology. As a result, we are now a formidable leader offering a single source service platform of superior products and services benefitting the entire nation. This, in a company steeped in archaic beliefs was possible only by getting all staff to believe in the change. This was the first stage of unification of two different corporate styles and saving several billion rupees in the process, within a short period of two years, whilst achieving the set goals.

Our unification and organizational transformation could not have come at a better time, as the same year saw a dramatic increase in the need for technology and connectivity solutions due to the COVID-19 pandemic. Seeing this surge and understanding the demand of the future, we extended our fibre network to 65,000km across Sri Lanka, offering fast and accessible broadband services to boost the digital capacity in the country. We also understood that with our experienced and talented workforce we were no longer a simple telephone company but shifting fast into the technology field through the empowerment of digital platforms.

We take pride in connecting the nation linking over 850 Government offices, covering all cities, including smaller divisions and rural areas also providing connectivity to other operators including our competitor telcos, institutions and the public.   

SLT Group possess the largest data centres in the country, and our longstanding partnerships with global tech giants like Microsoft, Oracle and VMware mean we are fully equipped to provide the most secure hosting services for public and state institutions, as well as large corporates and foreign investors. Our link to the world is accessed through undersea cables owned by a regional consortium of which SLT is a shareholder. SLT operates the only cable depot in South Asia out of the Galle Harbor for installations and repairs of sea cables. 

Not stopping at that we will soon reactivate the largest earth satellite station in Padukka established by SLT on the vision of Late Sir Arthur C Clarke to bring in the latest satellite technology and to serve as a backup to the under sea cable systems. SLTMOBITEL invests over 18 billion rupees annually to improve and keep abreast with the most modern technology in the world.

We see that out of crises, emerge new and incredible opportunities, particularly if we are able to change or challenge traditional approaches and effect paradigm shifts. Importantly, measures taken to survive and end a crisis are often seen to make an organization or even a country stronger and more resilient for future events.

For example, the Asian debt crisis of 1997-1998, plunged the affected countries into deep recession, rapidly increasing unemployment, poverty, and social unrest. Although devastating for these countries and people, especially Indonesia and Thailand, the Asian debt crisis provided valuable financial lessons that would stand Asia in good stead for the global crisis two and half decades later. The crisis helped Asian economies build up their foreign exchange reserves as a buffer; maintain current account surpluses; and allowed their exchange rates to float. Unfortunately, Sri Lanka did not learn the lessons from this and continued to borrow heavily without a proper business case and in the process allowed large scale leakages in the form of waste and corruption.      

In the past four years Sri Lanka has seen and faced unprecedented challenges. In 2019 April we experienced the Easter Day terrorist attacks, which had a tremendous impact on the country’s tourism sector, one of the largest forex earners for us. The failure of the government in power to foresee the danger of ISIS infiltrations in Sri Lanka despite many warnings must be recorded for posterity as no nation can drop its guard on national security in an environment of geo-politics plaguing the world and more so the greater Asian region.

Then the Covid-19 pandemic devastated the country’s economy further. Although we as a nation was able to contain and control the pandemic the cost the country had to bear was unprecedented. As you are aware, the toll the pandemic has exacted on the global economy has been significant, many countries worldwide are still facing the repercussions.

During the pandemic and prolonged lockdowns, that restrained mobilization of workforces, our economy was crippled and what we face today are the results we have reaped from prolonged mismanagement of our economy and the multiple effects of global meltdown and disruptions in the supply chains, leading to political unrest and regime change. 

In this void, Sri Lanka’s need for data and connectivity skyrocketed, with demands from the ordinary citizens on the streets, to schools and businesses. The need for revolution came sooner and more urgently and SLT Mobitel unified to serve the nation and fulfill our duty to Society. As it is, the Telecom sector is enabling other industries to reduce their CO2 emissions through digitalization. These sectors include transport, agriculture, construction and energy by reduction in commuting through the shift to communication.  

The broadest presence possessed by SLT Mobitel across the value chain offers unparalleled capacity to meet the needs of tech companies, large corporates, public and state institutions. With our capabilities and strong infrastructure across the country, we are geared to undertake this challenge and bring about the change the people of this country want to see. 

Our efforts are now focused on developing technological solutions for the challenges the country is facing whilst we continue investment in infrastructure development. 

Our effort will be further supported by our Research & Development unit, “The Embryo” developing new devices and applications in-house by harnessing the skills of young IT engineers. 

Our country faces key issues in several sectors. Currently privatizing state institutions that are running losses of up to billions of dollars is a key topic of conversation among the government, economists, think tanks and donors looking to reform the country’s economy. 

But you and I know we are a resilient nation and as hard as it may be to accept, this national crisis does hold opportunities for much needed reforms and transformation in Sri Lanka. Selling assets may look the easiest as the economic pundits some who have never ever run a business but preach from text books believe in their buzz term “Picking the low hanging fruit”. If you take our Company as an example we did what we did by gaining confidence of the trade unions and the staff on our fundamental principles Zero Corruption, Maximize efficiency, Minimize waste and inclusiveness in Management. Yes just these four principles to the fore which kept our staff content and at peace with no industrial disputes. 

Similarly the asset rich but loss making SOE’s if brought under a clean management of experienced corporate executives with absolutely no political interference will turn around to profitability attracting credible investors.    

Take our overburdened transport sector for instance, the railways holding multi billion rupees worth of assets in fixed infrastructure and rolling stock but how often do we see trains running on these rails and at what speed. Do we need to sell or restructure with the participation of staff and credible investments? Food for thought. The shortage of public transport during peak hours, over-crowding, congestion, lack of planning and coordination, fuel wastage are dilemmas that need urgent attention. If we convert the problems to opportunities of demand we have a good model to reform. This is just one worrisome institution which can be transformed from a national burden to a crown jewel. 

Sri Lanka’s judicial process can be improved by digital platforms to deliver justice without delay. Our citizens do not have access to appropriate legal redress and equitable relief due to the higher number of cases and overly extended time taken for resolution, the system is overburdened with physical documents and lack of integration between relevant institutions. A large number of people waste days in court and still come away with limited information relating to their cases.

Our Agri-value chain faces issues, so do our overly burdened healthcare sector. We need to understand the challenges and address these issues. Critical sectors and services must be transformed into efficient, transparent, and profitable entities so in turn they can transform people’s lives – this is the true system change the country needs. Currently, state welfare is offered to all citizens rich or poor which the government coffers cannot afford. Whereas the welfare offered should only be to the deserving at the bottom of the social strata through a digital platform identifying the poorest. 

Yes, we are beset with issue and challenges – when crises are in motion, turning them into opportunities often requires the courage of seeing new ways, thinking, and responding. SLT epitomizes how it can be done.  SLT is a prime example of seizing opportunities and being able to bring impactful change for the nation.  

In our transformation journey, we even looked to other inspiring models in modern society that served us as examples of how technology can further improve the economic standing of the country. 

Take Singapore – By overhauling the city through technology, permeating every sphere of activity, Singapore became an Intelligent Island in 2000. Singapore’s Smart Nation goals was aligned to the theme of increasing connectivity as a basic prerequisite. The island nation embraced the ‘E3A’ vision: “Connecting Everyone, Everything, Everywhere, All the time.” An all-encompassing Infocom Development Authority of Singapore was created, and they launched a series of innovative technology initiatives that formed the infrastructural foundation of the Smart Nation.

I believe Singapore can be treated as a testbed for smart city models that may become widespread several years from now when technology will rest at the heart of urban systems.

Look at Telangana in India, part of the country’s vision to develop smart cities. In 8 years, Telangana has attracted investments worth Rs 2.34 trillion. To accelerate industrial growth in the state and to make Telangana a favoured destination for investment, the state government had enacted the TS-iPASS act for granting approvals to the entrepreneurs at a single point within set time limits based on a self-certification furnished by themselves, similar to what Sri Lanka had many years back under the GCEC and later BOI but abandoned for reasons known only to the political hierarchy.

What is important today is not just providing access to devices and networks which may lead to digital inclusion, but instead ensure digital empowerment with aspirations to transform our nation into a digitally empowered society and a knowledge economy. This is where we figure as the transformer of the nation through tested digital platforms if only the state realizes and believe that true governance is in keeping politics and administration clearly separated as done in the past through the appointment of permeant secretaries and not ones who migrate with the minister for political reasons.

Despite SLT being transformed into a listed entity in the Colombo Stock Exchange political interference continued to plague the company in the formative years of privatization due to its unique composition of a major minority stake under the Ministry of Finance. However, even with political interference the company did not stagnate but operated as a profitable publicly listed conglomerate, offering technology and connectivity solutions, ready-to-go technology platforms, advanced network backbone services and digital infrastructure. This was primarily due to its enormous asset base and the experience staff who continued to defy the odds and protected the Company. 

I do believe, Sri Lanka Telecom’s journey, especially in the past 3 years is a case study of an organization’s adaptation and evolving despite being in the midst of challenging environments. The company’s journey throughout the Covid-19 pandemic and the economic crisis and the opportunities it present for potential investors in Sri Lanka is a remarkable story. 

During this period the Company did not allow any form of politics to enter or influence its business and maintained its stature as an apolitical corporate giant.

Sri Lanka Telecom serves as a benchmark model for government institutions and law makers in the country – how to transform and grow state institutions into successful organizations under a public private partnership.        

SLT’s evolution is one of the biggest success stories for the country. Our state-of-the-art infrastructure has been the fundamental backbone for the growth of the telecom services and has played a pivotal role in bridging the digital divide, connecting the unconnected and facilitating widespread mobile connectivity. It has helped the country’s visibility in global markets together with the company’s enterprise service solutions, provides foreign investors with ready-to-move operations in the market and a robust technological foundation.  

Our mission is to move the country towards E-Governance and Digital Commerce. Our propositions for critical services and sectors such as healthcare, education, transportation, agriculture, tourism, judiciary and banking and finance will ensure the nation and its people would thrive.    

A key achievement of SLT was its ability to facilitate the unpredicted transition to digital learning. Children, or rather Education one of the most affected, we offered special education platforms and channels enabling our education system in the country during the periods of shutdowns. Our platforms are also used by essential services catering to the needs of our citizens. Our Special Government Business Division together with The “Embryo” are committed to help many institutions adopt technology to build their efficiencies and capabilities. Moving forward our Group will further consolidate the service platforms with a target of unified operations under one roof when our most modern high tech and green concept headquarter building is commissioned in a sprawling tech park in Colombo next year. 

We are expanding our fibre network coverage and aim to reduce the carbon footprint. Solar, wind, hydro and other renewable energy options are being pursued to migrate from fossil fuels to low carbon renewable sources of energy. 

Our training centers with accreditation from the University of Hertfordshire will be empowered and upgraded to institutions of technology to accommodate IT students for the local and global markets to enhance the digital landscape, our country badly needs. 

With our island wide vast network and the ownership in land and buildings, asset monetization with investors has already begun to improve the wealth and the business turnover of the group as opposed to asset stripping in desperation. 

In short we are proud to be labeled as the cash cow for the government treasury and our model could be adopted to transform the loss making state institutions into profitable entities without resorting to desperate moves of exit by one time sale of assets. We at SLT are ready to assist the government in formulating strategy in the restructuring of such SOE’s with the involvement and corporation of staff. This I believe is the real system change the people of this country hope for and the IMF and World Bank suggest. Business Sans politics in management.

World over, politics can enormously impact businesses, especially in our region. However, SLT leads the way in showcasing how corporates and institutions can thrive with the least political influence. 

To become tomorrow’s innovators, entrepreneurs and leaders, our citizens need to be empowered with the digital skills and access to technology and markets that are essential to thrive in an increasingly digitized global economy. Governments need to find more nimble and effective means of delivering services and interacting with citizens. Businesses need to utilize digitally-centered business models to connect with the millions of customers previously out of reach due to geography or low income. 

I am reminded of a quote made by John F. Kennedy during a speech in 1959 famously said: “When written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger and one represents opportunity.” President Kennedy’s wisdom about a crisis yielding unique opportunities may be more important than ever for us all today.

I sincerely hope that this conference will seize the moment, deliberate on various issues that need to be addressed, understand the opportunities before us and come up with recommendations to recover and rebuild better. Especially in rebuilding Sri Lanka, recognizing the need for adequate finance, significant investments in infrastructure and full utilization of technology and innovation. SLT-Mobitel will remain steadfast as the nation’s long-term partner on this journey.

My best wishes for a successful and fruitful conference.

Thank you!

Rohan Fernando

Chairman SLT Group 

Oct 2022

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