South East Asia’s first 4.5G demo clocks 1GBps on Dialog’s LTE network

Sri Lanka established yet another milestone on the region’s Broadband Technology landscape with an exposition of South East Asia’s first 4.5G demonstration featuring download speeds in excess of 1Gbps (Gigabits per Second).

The ground breaking technology capability test was carried out on the Huawei Technologies’ LTE infrastructure of Dialog Axiata, the country’s leading 4G Network Provider. The demonstration established the capability of the network to deliver throughputs in excess of 1 Gbps on the LTE Radio (Air) Interface, setting a solid foundation for the future evolution of the nation’s 4G services to a technology generation well ahead of neighboring markets.

Following the 4.5G technology capability test, Sri Lanka joins a select circle of 20 countries where 4.5G capabilities have been demonstrated.

In 2014, Sri Lanka became the first country in South Asia to Launch Commercial 4G services, when Dialog Axiata launched its pioneering 4G services on FD-LTE and TD-LTE technologies. Dialog’s 4G LTE networks have since evolved to deliver burst speeds up to 100 MBps and provides a population coverage in excess of 50% with respect to ultra-high speed 4G services. Following aggressively in the footsteps of the company’s 3G-HSPA network which provides a population coverage in excess of 83%, Dialog’s 4G LTE Services are expected to provide ultra high speed broadband coverage to all populated areas of the country in the near future.

The ITU names Sri Lanka as exhibiting the lowest broadband tariffs in the Asia Pacific Region, while Akamai, in its report of ‘State of the Internet – Connectivity’ points to Sri Lanka leading the region if not the world in terms of the affordability, availability, quality and inclusivity of broadband services. - Dialog

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Sri Lanka banking sector ‘Multiple shocks dampen beat’

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FC Research expects the banking sector to have a slow phase during 2016E-18E with slow GDP growth, tax attacks, sluggish credit growth and rising non-performing loans. Hence we expect our banking sector universe to provide 15% average return over 1-Year period slightly slower than the expected market return.

Slow GDP growth and Tax Attack: The current tight monetary policy and tax increase are unlikely to help the GDP growth numbers to improve. We expect 2Q & 3Q2016 GDP also to remain weak while growth is likely to pick up towards 4Q2016 amidst the rise in the construction led by government starting off most of the stalled projects. VAT has been increased to 15% resulting in an incremental impact for the banking sector.

Credit growth to slow down to 16%: We expect private sector credit growth to slow down to 16% during 2016E gradually slowing down while 1H2016 continuing to remain on the high side. CBSL is comfortable with credit growth of 12%-15% in the sector. However, private sector credit growth shot up to 25% for 2015 amidst lose monetary stance.

NPLs to be on the rise in 2H2016 onwards: We expect Banking sector non-performing loans to increase with increase in the interest rate and weak economic condition: Non-performing loans and GDP always have a negative relationship. Downturn in the economy growth, real exchange rate appreciation and the rise in real interest rate contributes to increase in the Non-Performing loans.

Banking Sector on a HOLD with 15% avg. return over 1-Year Period: With Average sector return at 15%, current interest rates make valuations unattractive on expected return (Refer 5.1) despite comparatively cheap frontier market valuations. Banking Sector HOLD. We recommend a STRONG BUY on SAMP and NTB, BUY on COMB.X, HOLD on COMB.N, HNB.X, SEYB.N and SEYB.X. HNB.N and NDB are recommended as a SELL. - FC Research
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Sri Lanka’s Central Bank to sell USD250mn development bonds

(LBO) – The Central Bank will issue 250 million US dollars development bonds with a tenor of 1 year and 7 months, 2 years and 7 months and 4 years to local and foreign investors.

The Debt Department said the subscription will be at a floating rate of 6 month LIBOR for USD plus a margin through competitive bidding or at a fixed rate to be determined through competitive bidding.

Minimum investment is 10,000 US dollars with additional investments in multiples of 10,000 US dollars.

The issue will be open for subscription from 21 to 27 June and has a date of settlement of 30 June 2016.

The recent development bonds issue amounting to 200 million US dollars oversubscribed with over 516 million US dollars of bids received from investors.

The central bank accepted 250.04 million US dollars in one year bond at a floating rate of six month LIBOR (94 bp) plus 438.01 basis points.

Development bonds are to be issued by the Public Debt Department of Central Bank and exempted from income tax paid in Sri Lanka.

Foreigners, non resident or dual citizen Sri Lankans, NRFC/RFC account holders, authorized dealers in foreign exchange, primary dealers in government securities, BOI specified companies and specified insurance companies are among eligible investors.