Melstacorp-backed Lanka Bell plans resurgence

Telecom operator Lanka Bell, which has been whammed with taxation, is hoping to get back on its feet through efficiencies and cost cutting, its parent Melstacorp PLC (MELS) said recently.
“In terms of Lanka Bell, we’re looking to see how we can make it more efficient, we’re looking at the processes to see how we can economize,” MELS Managing Director Amitha Gooneratne said. He said that Lanka Bell has been going through a ‘stress period’ due to excessive government taxation.

The telecom industry was removed from the 14 percent value-added tax (VAT) exceptions list and taxation over data was also increased sharply over the past three months.
“Almost every year they (taxes) have been increased, so at the moment most of the revenue that we generate or a substantial amount is contributed to the government in terms of frequency fees, VAT fees and various other levies, so that’s a substantial amount going out and contributing to the government coffers,” Gooneratne said.
He noted that processes at Lanka Bell have to be reorganized to contribute profits towards MELS. Lanka Bell is a market leader in the CDMA operations in Sri Lanka.
In addition, Lanka Bell and Dialog Axiata PLC are the only privately-owned companies to have their own submarine cable landing stations in Sri Lanka, which allow them to provide more data for their customers and fully utilize 4G LTE technology that the two companies have invested heavily in.
However, Sri Lanka’s telecommunication industry is considered to be heavily overcrowded and saturated. 
While Lanka Bell is considering bringing itself back to profitability, many industry players, who are mostly owned by foreign investors, are considering the divestment of their local operations.