Sri Lanka Telecom (SLT) was the country’s first telecommunications company and is the
successor to the former government owned Telecommunications Department. It leads the telecommunication industry with 87 per cent of the fixed line network.

In 1996 SLT was incorporated as a public limited liability company and in 1997 NTT
Communications Corporation invested USD 225 million to take a 35 per cent stake in SLT.
This was subsequently transferred to NTT Com.

Over these past five years SLT gave priority to adding new connections, upgrading its
network, installing financial systems that work and creating a customer friendly work culture.

In 2002 SLT acquired Mobitel, one of the four mobile operators in the country, in which it
previously had a 40 per cent stake. Mobitel currently has a 15 per cent slice of the mobile
market.

In 2002 SLT went ahead with its Initial Public Offering (IPO) where the Government of
Sri Lanka, the majority shareholder, divested a 12% stake in the Company. Consequent to
this IPO the Government now owns 49.5% of SLT, NTT Communication Corporation owns
35.2%, and the public owns the balance 15.3%. SLT became the largest listed company in
the Colombo Stock Exchange with this IPO.

OPERATIONS
SLT currently has a customer base of 800,000 doubling its number of subscribers in five
years. SLT provides a range of services to domestic and corporate subscribers including
domestic and international voice, internet services, data services, domestic and international
leased circuits, frame relay services, ISDN, ADSL, satellite up-link service and maritime
transmission.

With its acquisition of Mobitel, the third largest mobile operator, SLT becomes the only
integrated operator in this country to offer fixed line, data and mobile services. In 2003
Mobitel will begin a phased transfer of its subscribers from its existing network to a third
generation mobile network.

In five years since privatization SLT has transformed itself from a moribund and lethargic
state entity to a dynamic service provider able to compete with the best in the world. This it
has done by upgrading its communications infrastructure, strengthening its marketing skills
and strategy, installing new financial systems and controls, and making best use of its human
resources.

Over LKR 40 billion has been invested in the past five years to upgrade telecommunications
infrastructure and create a state-of-the-art network.

486,997 direct exchange lines (DELs) have been added in five years and SLT’s telephone
penetration in the Colombo Metropolitan area has increased from 8.9 per cent in 1997 to
15.2 per cent as at 30 June 2002. Its telephony penetration in Sri Lanka increased from 1.7
per cent to 3.9 per cent during this period.

Service quality improved remarkably after privatization. Faults clearance within 24 hours
reached 96% in the Colombo Metropolitan area and 83% in the whole island in 2002. The
faults rate came down to 7.3% in 2002. The call completion ratio recorded its highest, 46.5%,
in the same year. Productivity improvements such as DELs per employee went up to 93 as
opposed to 36 in 1997.

SLT has benefited immensely from its alliance with NTT. NTT has provided strategic advice,
trained SLT employees and helped the Company develop its marketing infrastructure and
strategy. NTT expertise has also facilitated the development of SLT’s network, service
platforms, information technology and its operating and financial controls and systems.

For the year ended 31 December 2002 SLT had a revenue of LKR 25,383 million and generated
a net profit of LKR 2,685 million. The Company had net assets of LKR 39,062 million and the
Group net assets were LKR 38,789 million as at 31 December 2002. SLT incurred a capital
expenditure of LKR 3,445 million for 2002 on strengthening its network and infrastructure. In
addition, SLT also accrued the balance 60% of Mobitel (Pvt) Ltd. at a cost of LKR 922 million.

INFRASTRUCTURE
SLT’s unparalleled state-of-the-art digital transport network consists of digital microwave
radio systems and an optical fibre network operating on synchronous digital hierarchy (SDH).
This network is connected to over 500 digital switching nodes scattered in every corner of the
country.

SLT’s state-of-the-art transport network is supported by national and international
telecommunications links and serves as the foundation for the telecommunications infrastructure
in this country. It has become an indispensable transport medium for the corporate sector for
their voice and data networks. The Company extends its connectivity through its three
international gateways.

Two digital fibre optic cables – SEA-ME-WE II and SEA-ME-WE III – complement the three
digital satellite earth stations. With these facilities, SLT is able to provide a reliable and high
quality IDD service to 219 countries and ISDN service to major destinations. SLT’s international
links to major destinations are on a CCITT No. 7 signal whilst continuing to upgrade the balance.

THE WAY FORWARD
The Company has also focused on developing standards of customer care. Competition
meant having the capacity to respond effectively and speedily to customer demands and
the ability to provide total customer satisfaction. This required a significant re-orientation
in employee attitudes and approaches and a remarkable enhancement in the levels of
customer care offered.

In the next phase priority will be given to developing communication services in the non-voice
sectors such as internet access, email and the transmission of data and images and to
strengthening SLT’s network.

SLT’s network is the most technologically sophisticated in Sri Lanka. As part of its plans of
making Sri Lanka the telecommunications hub of South Asia, SLT is focusing on strengthening
its global connectivity and international bandwidth. It recently negotiated an agreement with 12
international carriers for the construction of SEA-ME-WE IV which will go into service in 2004.


More intensive marketing of IDD and value added services such as SLT PLUS will be pursued in
2003. Its international services will take on a new dimension with the introduction of pre-paid
cards and budget IDD services. Services such as Internet Data Centre (iDC), IP-VPN and ADSL
will provide sophisticated solutions to both our domestic and corporate customers.

Sri Lanka is moving towards a fully liberalized telecommunications market environment. SLT
will use this opportunity to grow and to provide state-of-the-art services. SLT’s goal is to make
the country the hub of telecommunications in the South Asian region.

BOARD OF DIRECTORS
Mr. Anil Obeyesekera, P.C. - Chairman
Mr. Shuhei Anan – Chief Executive Officer
Mr. Seneviratne Bandara Divaratne
Mr. Kiyoshi Maeda
Mr. Haruhiko Yamada
Mr. Shoji Takahashi
Mr. S.N. Kumar
Mrs. Leisha Chandrasena