"The trend is found throughout the world where people are substituting mobiles for fixed."

Users of mobile phones grew to 11.4 million in the first quarter, up 30.1 percent or 2.6 million.

Fixed access wireless also grew 18.0 percent (375,325) to 2,088,589 in the first quarter.

Sri Lanka's fixed access wireless, offered by Lanka Bell, Suntel, Dialog Telecom and Sri Lanka Telecom is based on CDMA (code division multiple access) offering limited mobility.

Wireline is supplied only by Sri Lanka Telecom.

In India the fixed sector slowdown started in 2005 and operators such as MTNL and BSNL deployed special teams to persuade customers not to return their fixed phones.

Samarajiva says high installation charges of SLT, which are non-refundable may have prevented customers from delaying phone returns and surveys have shown that Sri Lankans have "an unusual cultural preference for fixed phones".

Both factors may have delayed the trend in Sri Lanka.

"However, it is possible that Mobitel's Upahara package aimed at government servants and pensioners may have tipped the balance," Samarajiva says.

"If a call from a Mobitel phone to a fixed phone during the specified hours is free, while the same call from a fixed wireline or wireless phone is not, it seems reasonable to replace the fixed phone with an Upahara package connection."

Analysts say the Upahara package also helped triggered a price war in the mobile sector, and operators are losing money. But with expansion to the north and the east of the island being possible after the end of a 30-year war, prospects for the sector has improved.

The Sri Lanka unit of Bharti Airtel, which began operations in January said it had driven prices down ahead of its arrival.

It had signed up one million users and was expanding to the North and East of the island after the end of a 30-year war in the area this May.

Lanka Bell said it had begun operations in Jaffna. Sri Lanka Telecom already has a presence in the area.

Total fixed lines, including wireless had grown 10.4 percent to 3,339,978 in the first quarter representing a teledensity of 17 per 100 persons.

With mobiles, teledensity was 73 per 100 persons up from 59 a year ago.

Copper wires could be used for data such as ADSL which potentially could make more money for an operator.

Internet and email subscribers were 234,000 by end December 2008. By end December public payphones had declined to 8,500 from 8,526 a year earlier.