BMI View: We have made some minor positive forecast adjustments in the latestQ117 Sri Lankan telecommunications report update, but our core view remains unchanged. We maintain the view that the mobile market has organic growth potential both in terms of new subscribers and 3G/4G uptake up until 2021. The market will continue to add new subscribers over the medium term and benefit from a higher rate of advanced data services based revenue growth out to 2021. Furthermore, we note that Sri Lanka is the most financially inclusive country in South Asia, yet ATM and bank branch penetration remain low. Mobile financial services do, however, have the potential to increase access to basic financial services for rural dwellers, estimated at over 81.6% of the country's population at the end of 2015.
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More than 75% of mobile phone subscriptions remain prepaid, which limits the market for premium services. Average revenue per user (ARPU) has not rapidly increased, although 3G and 4G services have been launched, as operators compete aggressively on price.