SLT’s WiMax Cross Connection
By Mandana Ismail Abeywickrema
Sri Lanka Telecom (SLT) has incurred losses amounting to millions of rupees due to a venture initiated to provide WiMax services to the country through a company owned by one of President Mahinda Rajapaksa’s nephews, Himal Lalindra Hettiarachchi.
The WiMax deal it is learnt has resulted in SLT incurring losses amounting to over Rs. 100 million.
SLT was forced into entering into a deal with Sky Network Private Limited, a company initiated by Hettiarachchi, since the Telecommunications Regulatory Commission (TRC) did not facilitate SLT with the necessary frequencies to operate WiMax in Sri Lanka.
WiMax meaning Worldwide Interoperability for Microwave Access, is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The technology provides up to 10 Mbit/s broadband speed without the need for cables.
SLT decided to invest in the WiMax technology about two years back as it was financially viable and of high quality. The necessary frequencies had to be requested from the TRC, which is under the President’s purview.
Interestingly, the TRC did not provide frequencies to SLT to commence WiMax. Although telecommunication operators like Suntel and Dialog were provided with the necessary frequencies, SLT did not receive the facility.
Requests by SLT rejected
It was quite baffling as the TRC kept rejecting requests made by SLT, a partially state owned entity, for WiMax frequencies.
Meanwhile, the TRC allocated WiMax frequencies to a private company called Sky Network Private Limited. The company was allocated frequencies 2400-2430Mhz (island wide), 5470-5850Mhz (selected urban towns around Colombo) and 3500Mhz band reserved on exclusive basis.
Presidential nephew Himal Lalindra Hettiarachchi’s involvement in Sky Networks is quite interesting.
Sky Networks is a 13-year-old company formed on May 9, 2006. The company had two shareholders — A.H. Sirisena and K.M.S. Bandara — who had Rs. 10 shares each in Sky Networks.
This Rs. 20 Company was registered under Company Registration No. N (PVS) 46122 under the address 175/2, Old Kottawa Road, Mirihana, Nugegoda.
On May 24, 2006, one Ajantha Karundasa was also added as a director to the company.
The company was dormant till March 15, 2007 when 950,000 shares of Sky Networks was purchased by Hastings Trading E Services – Portugal (subsidiary of Lyca Group) and with the investment of a foreign company, Sky Networks also underwent several changes.
On March 30, 2007, Karunadasa resigned from Sky Networks and Himal Hettiarachchi replaced him as a director of the company.
However, Hettiarachchi’s involvement in Sky Networks dates to its inception, as the address in Nugegoda used to register the Company belonged to him. Hettiarachchi therefore has been a silent partner of the Company till 2007.
On June 1, 2007 Sirisena also moved out of the Company making way for an Indian named Ravindra Gaitonde to enter Sky Network’s board of directors. One Milind Kangle also joined the board of directors as the representative of Lyca Group.
SLT purchases shares
Sky Networks then became a multinational company and the TRC issued WiMax frequencies to Sky Networks.
Even by then, continuous requests made by SLT for WiMax frequencies were ignored by the TRC. It is in this backdrop that Sky Networks informed SLT of its desire to sell shares to it.
Finally, SLT decided to purchase shares from Sky Networks, which had WiMax frequencies, through Board Memorandum No. PLC/T/65/2007 on June 29, 2007.
The SLT board of directors decided to enter into an agreement with Sky Networks in order to obtain the WiMax frequencies that have been allocated to the company to upgrade the SLT system.
SLT entered into an agreement with Sky Networks in May 2008 and bought 40% of the shares at a cost of US$ 100 million. SLT Chairperson, Leisha De Silva Chandrasena is currently the Chairperson of Sky Networks and Himal Hettiarachchi, Sumith Wijesinghe and Sidath Fernando are board members.
Apart from spending a large amount of money on the Sky Networks shares, the agreement between two companies is not beneficial to SLT.
It is learnt that while 60% of the profits earned through the usage of WiMax should be given to Sky Networks, SLT has to incur 70% of the total project cost. Therefore, SLT is at the losing end while the Presidential nephew earns most of the profits through Sky Networks. Recent news reports state that Sky Network is a subsidiary of SLT and is a complementary business to SLT.
Sky Network is to provide WiMax services to parts of the country where ADSL services are not offered by SLT.
The venture is to commence operations in March 2010 and is expected to provide services to Colombo, Gampaha and Kalutara Districts under Phase 1.
Be that as it may, SLT’s WiMax project has resulted in the institution losing millions of rupees in a deal that would become a financial burden in the long term.