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The second phase of privatisation of Sri Lanka Telecom (SLT), which will be in the form of an Initial Public Offering (IPO) on the Colombo Stock Exchange, is expected to be launched in October.

The Government holds a 61.5 per cent stake in SLT at present and the proposed offering is expected to comprise at least 15 per cent of the issued shares although the exact quantum is yet to be determined. The first phase in the privatisation of Telecom was concluded in 1997 when the Government sold a 35 per cent stake to NTT of Japan, which also assumed management control.

According to an SLT news release, work on the listing process has already begun with the DFCC Bank being awarded the mandate to manage the IPO. A domestic listing with focus on international marketing is intended and various options and offering structures will be examined in this regard.

DFCC is expected to work in partnership with an international investment bank regarding an international offering, and negotiations are presently under way between an international investment bank and SLT and NTT.

The proposed IPO will be the first listing of a telecommunications company on the Colombo Stock Exchange (CSE). It is expected to be the largest yet in terms of the value and number of shares and is expected to significantly boost market capitalisation.

Following the listing, SLT will be the most valuable company quoted on the CSE in terms of market capitalisation, and the most liquid stock in the market as the proposed offering may exceed 270 million of the company's shares.

"The SLT offering could spur a renewal of foreign interest in the domestic stock market. The overseas marketing campaign targeting foreign institutional investors will also have a positive spin-off in terms of raising the profile of Sri Lanka as a destination for portfolio investment," the release said.

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