Mar. 01 (LBO) — Swedish telco operator Telia AB’s Sri Lankan subsidiary on Wednesday reported a 66 percent drop in six months to December profits, on higher CDMA related administrative, distribution and depreciation costs. The private wireless local loop operator (WLL) has seen its subscriber growth soar to 188,000 customers after securing a license to offer cheaper connectivity through low cost CDMA (code division multiple access) technology.
Industry watchers said the rapid increase in the number of connections and the aggressive marketing strategy adopted to attract customer contributed to the low profit situation.
Distribution costs soared to Rs. 325 million since it launched CDMA service in June 2005, up from Rs. 139 million for the full year 2004.
Administrative costs and depreciation rose to over Rs. 2 billion for the second half of 2005 from a billion rupees in 2004.
Profits were at Rs. 172 million down from Rs. 505 million in 2004, despite revenue increasing to Rs. 2.9 billion, up from 1.9 billion a year before.
Industry analysts expect revenues and profits at Suntel to grow with a fresh round of expansion planed for the next three years.
Suntel, Sri Lanka’s second largest fixe