Sri Lankan mobile phone operator Mobitel has adopted a total cash management solution provided by Citi to streamline its treasury processes.
Under the terms of the mandate, Citi has automated and centralised Mobitel's payables, receivables and reconciliation processes with its local Sri Lankan branch. The mandate utilises the bank's electronic banking platform, called CitiDirect.
"Through experience and innovation, the Citi team successfully structured a solution that truly enhances processes and provides value creation benefits to Mobitel," said Nishantha Weerakoon, senior general manager of finance and procurement at Mobitel.
Before this new solution was implemented, the company's payables, receivables and reconciliation functions were siloed and processed manually, and its accounts were spread among several banks.
The solution also streamlines Mobitel's issuance of withholding tax certificates, a requirement under Sri Lankan law. Through outsourcing to Citi, the company is now able to obtain a withholding tax certificate at the time of payment.
"The Mobitel mandate reinforces Citi's capabilities in customising solutions for the telecom segment in Sri Lanka," said Dilshan Seneviratne, Citi's global transaction services (GTS) head for Sri Lanka. "Citi's ability to understand client requirements and provide a solution based on the customisation of its products has enabled Mobitel to fulfil its requirements through a one-bank solution."
Citi's other Asia-Pacific mobile service provider cash mandates include Malaysia's Digi and Australia's Optus.
Revenue at Mobitel, a subsidiary of Sri Lanka Telecom, grew 72% year-on-year in 2008 to SLR12 billion ($105 million). The total number of subscribers rose to 2.7 million from 1.3 million over the same period. Mobitel has a 24% market share, which makes it Sri Lanka's second largest mobile phone service provider after Dialog.
According to a company statement, Mobitel plans to increase the number of 3.5G [an enhancement on common 3G cellular networks] network base stations to 2,000 by the end of the year.
With the end of Sri Lanka's 26-year civil war, many are optimistic that peace and prosperity will benefit businesses on the island. Improved security and the ability of the government to refocus its efforts on infrastructure investment and other development projects would improve Sri Lanka's business climate. Increased investment and a rise in trade would thus present opportunities for banks' trade finance businesses.
"Our outlook for Sri Lanka is very positive," said Seneviratne. "With the end of the ethnic conflict, we anticipate improved investment and renewed momentum in economic activity."
In June, the country's exports contracted 13.7% year-on-year and imports fell 30.3%. Both numbers are better than April and May when the contractions were 30% and between 40% and 50% respectively.
Sri Lanka's first-half trade deficit was down to $1.3 billion from $3.1 billion in 2008. HSBC predicts it will be $4.5 billion for 2009 as a whole compared to $6 billion last year.
"Export performance should gradually continue to improve, but import growth should turn around at a faster pace not only because of commodity price movements but also greater demand for building materials as reconstruction work gets underway," said Prakriti Sofat, an economist at HSBC.
Citi GTS has operated in Sri Lanka since 2004. Despite the civil unrest, the bank's business has grown in excess of 12% year-on-year since opening.
"Citi Sri Lanka GTS goals are to continue to provide new technology platforms which enhance our clients' abilities to better manage their businesses," said Seneviratne.
The bank has been expanding its presence in South Asia, most recently with the addition of custody and clearing in Bangladesh last December.
