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November 30, 2006 (LBO) – Tough regulations are stifling growth of Sri Lanka’s cable and satellite television industry, a local research firm says, but is poised to take off as new and larger players’ lower costs and improve choice.

Sri Lanka’s current penetration of satellite and cable channels is less than one percent of the three million households on the island that have a television.

Though highly under-penetrated, local firm Frontier Research says the sector is poised for growth as telco giants like Dialog Telekom Sri Lanka’s largest mobile phone operator, get into the business.

Dialog, the local unit of Telekom Malaysia, said recently it hoped to buy up satellite pay television operator Communiqu Broadband Networks and CBNSat for 523.8 million rupees.

The telecom giant also recently acquired a stake in Asset Media for 325 million rupees, which comes with a free to air and pay television licence and its own broadcasting studio.

“Sri Lankan media trends are nearing those of the rest of the region and it is down to one word convergence,” Imran Furkan, Analyst with Frontier Research, told LBO in an interview.

“In the past, cable and satellite television were delivered via traditional cables