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Business


 

Hutchinson to expand here

By Marianne David
Laying to rest doubts over the future of Hutchison Telecommunications Lanka (Pvt) Limited (HTLL), Deputy CEO, HTLL, Lasantha Perera said there were no plans in the offing for its parent company, Hutchison Telecommunications International Limited (HTIL) to sell off HTLL.
Questions over the possible sale of the local arm rose in the wake of HTIL selling off a 67% stake in its Indian mobile phone subsidiary Hutchison Essar to Vodafone recently.
HTIL’s plans with regard to future investments include investing up to US$ 5 billion in telecom businesses, including existing operations in Vietnam, Indonesia, Sri Lanka and new opportunities as highlighted in the HTIL website, confirmed Perera.

Hutch is the GSM mobile network of HTLL, which is a fully owned subsidiary of HTIL, a listed company in the New York and Hong Kong stock markets. Hutch revamped local operations in 2004 and is looking at a huge expansion this year.
“We are on an accelerated growth phase. We are a nationwide mobile operator now. When we started operations, it was a single cell operation where we provided mobility around a BTS. But in May 2004 we launched a 100% fully pre-paid mobile service in the Western Province and linked all the outstation towers and what we have today is a nationwide mobile network,” Perera said.

As for performance in Sri Lanka – given the presence of four operators and huge competition – HTLL presently boasts of a subscriber base, of 700,000.
Explaining how the company operates in such a highly competitive field, Perera pointed out it’s all about affordability and offering the best ‘value for money’ package for Sri Lankans.
“In 2006 our subscriber base grew by 100% and we intend carrying forward that momentum in to 2007 and beyond. However, we have not gone in for media promotions and publicised this. Historically we have always done business and given back better deals to our subscribers,” he added.
Hutch envisages delivering a mobile connection to every Sri Lankan and in order to achieve this, the company has adopted a two-pronged approach – a low entry cost and reduced call charges. Hutch also offers a range of value-added services.

“When Hutch was launched, an outgoing call was Rs. 12 a minute; we launched at Rs. 9 a minute. Today the rates have come down even further to Rs. 6 per minute. The market penetration was around 10% then; now it’s 25%. The end result was all mobile operators found that in order to go deeper into the masses they had to bring the prices down. That’s how the market took off. People used to believe it was about coverage, but now the focus is on affordability,” Perera explained.

Speaking about the feasibility of operating a 100% pre pay service, General Manager (Marketing), HTLL, Sanjaya Senarath pointed out that over 80% of the mobile telecommunications market in Sri Lanka is pre-paid.
Elaborated Perera, “When we started, pre-paid was a poor man’s thing. People preferred post-pay. But look at what has happened since. Today pre-paid is happening all over the world in all the emerging markets. The post-paid myth is now breaking down. If you want to improve penetration, you have to go pre-pay.”
Presently, Hutch covers almost the entire country excluding the north and a massive expansion plan is on the cards this year.

“Our population coverage today stands at about 35% to 40%. By the end of the year, with our massive expansion plan, we intend to take it up to about 80% to 90%,” asserted Perera.
Despite the company being a key player in the telecommunication industry, HTLL’s staff strength stands at just below 250 since the company is more systems and IT driven, especially since it is a fully pre-paid operator.
Hutch also boasts the largest ‘reload’ network in the island, and offers the ‘reload’ service for as low as Rs. 1 and sales are done using two channels – retail outlets numbering over 20,000 and direct sales promotions that are done at ground level in selected locations and regions.

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Gardiners exit Ceylon Theatres Group

By Ravi Ladduwahetty
The sale of the Gardiner Group stakes in Ceylon Theatres, Cargills and Millers on Friday in transactions surpassing the billion rupee mark (Rs.1011 million) will pave the way for the expansion strategies of both top corporates.
The Gardiner Group will diversify and expand into the leisure sector with a special emphasis on Ceylon Hotels Corporation and domestic tourism while the Cargills Group will expand into the food and beverage sector.
“It is a win- win situation for both sides,” Gardiner Group Chairman Sanjiv Gardiner and Ceylon Theatres/Cargills and Millers Ltd Chairman Anthony Page told The Nation Economist in individual interviews. On Friday, the Gardiner Group sold a 5% stake of Cargills amounting to 325,000 shares for Rs. 146.2 million, a 5% stake or 114,700 shares of Ceylon Theatres for Rs. 166.4 million and a 25% stake in Millers for Rs. 699.4 million.

A bulk of the Cargills share was traded at Rs. 450 while there were odd lots traded between Rs. 580 and Rs. 585.The bulk of the Ceylon Theatres share was traded at Rs. 1450 while there were odd lots traded between Rs. 1600 and Rs. 2000. The majority of the Millers shares were traded at 669 while there were odd lots traded at Rs. 683.

By this transaction, Ceylon Theatres increased its stake in Millers by acquiring 25% held by the companies controlled by Sanjiv Gardiner. This acquisition increased the stake of Ceylon Theatres in Millers to 81%. This will enable the Ceylon Theatres Group to further consolidate its operation in the food and beverage sector, Page said.
Gardiner Group Chairman Sanjiv Gardiner said that the deal was done in mutual interest which will enable the Gardiner Group to pursue its diversification strategies into its core business of leisure while it was beneficial for Cargills, Ceylon Theatres and Millers for its restructuring. It is a win -win situation for both sides, he said. Asked how much of the sale value was going to be injected to Ceylon Hotels Corporation, he said that the Gardiner Group was upbeat about the leisure sector and also emphasis was laid on domestic tourism. We are very flexible on the strategies and will be disclosing them in another four months, he said.

He said that the CHC had some legislative snags and they are currently being ironed out.
Meanwhile, Page said that the expansion of the Group’s food and beverage sector will entail the collection centres for the Cargills food city chains, the expansion of the chain itself and the company’s meat processing operations..
“We will be floating new corporates within the Group for which shareholder approval will be sought soon for raising the funds”, he said.

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Arpico introduces Privilege Loyalty Card

By Quintus Perera
The cherished norm for any business to succeed is to make the customer ‘The King’ and it is exactly what the Arpico Supercentres and Superstores managed by the giant local conglomerate Richard Pieris & Co have been doing.
To crown the Arpico supermarket customers, they are introducing an exclusive loyalty Card to their customers – Privilege Silver Card and Privilege Gold Card. The Privilege Silver Card will be awarded to all those who shop at Arpico Supercentres and Superstores and customers who shop for over Rs 250,000 within a year will automatically qualify for a Privilege Gold Card to enjoy enhanced privileges.

Pravir Samarasinghe, Director/Chief Operating Officer, Richard Pieris & Co. explaining the simple operation of the Cards at a media briefing held at their Navinna Head Office, on Friday said that in their 75 year journey one of the most successful factors has been the strong relationship with their stakeholders, specially, their customers.

He said “We sincerely believe that we are successful in business due to the loyalty of our customers”. He said that the introduction of the Card is to appreciate the continuous customer patronage. This is the contribution by us in return to the contribution our customers make.
Obtaining the Card is simple. Once the application form is filled and hand it over with Rs 100 enrolment fee to the cashier, the customer will get a temporary card immediately, and the actual card will follow within 14 days.
The customer is entitled for points on their purchases – every purchase of Rs 100 will give one point and points earned will be equivalent to the rupee value. These points could be redeemed immediately or could be allowed to be accumulated. The accumulated points could be redeemed later or can be forwarded for special gifts, discounts, prizes, surprises, exciting in-store deals, free shopping and even customized offerings.

Richard Pieris entered the supermarket sector fives years ago and has been successful in introducing the hypermarket concept to Sri Lanka. Within a short period of time it has managed to become a household name for convenient shopping as their outlets are well stocked with more than 35,000 high quality products.

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Terrorism no threat to 8 percent growth - President

(AFP) - Sri Lanka’s President said on Friday “terrorism” was no threat to growth as he forecast that the island’s economy would grow by eight percent in 2007.
President Mahinda Rajapaksa also said he expected annual eight percent average growth over the next five years despite government forces battling Tamil Tiger rebels in the island’s northeast.
“If we are to raise the living standards of our people to match those of the developed world even to some extent, it is essential to maintain an average growth rate of eight percent for the next five years,” he said.

The statement of Rajapaksa, who is also finance minister, came after the release of Central Bank figures showing that the economy grew by 7.4 percent in 2006, up from 6.0 percent in 2005. Last year’s performance was the best since 1978 when the economy expanded by 8.2 percent.
However, the Central Bank figures were lower than the economic growth estimate of 7.7 percent for 2006 issued by the department of census and statistics on Thursday.

“Our 10-year plan is prepared with this (eight percent growth) target in mind,” Rajapakse said.
Officials said the two sets of figures differed because they used different yardsticks and moves were under way to harmonise the numbers. Rajapaksa said the main challenge faced by the country during the past three decades was “terrorism in the North and East” and the search for a political solution to the Tamil separatist conflict which has claimed over 60,000 lives.

“During the last year the government’s policy was to fearlessly combat terrorism and develop the economy, without making terrorism an excuse to delay development,” Rajapakse said.
He said the government was also forced to deal with rising fuel prices.
His remarks came hours after the government announced a seven percent increase in the retail price of gasoline. Official figures showed agriculture, industry and services contributed to growth in 2006.

“Economic expansion was broadbased in 2006 as all sectors grew at healthy rates,” the Central Bank said in a statement.
Heavy fighting between troops and Liberation Tigers of Tamil Eelam (LTTE) guerrillas erupted in December 2005 and official figures show that at least 4,000 people have been killed since then.
On the downside, inflation rate jumped to 13.7 percent in 2006, up from 11.6 percent in 2005. The year-on-year inflation rate hit 20.5 percent in January.

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