The "unified" licence will remove restrictions that limit operators to a single service type such as cellular, wireless local loop or wired connections.

"We are trying to make the industry more competitive by having more flexible regulations, in keeping with the telecom requirements of today," said C Maliyadde, telecommunications ministry secretary.

He said the move would also help reduce the waiting list of more than 335,000 applicants for fixed lines. State-run Sri Lanka Telecom Ltd is unable to satisfy demand due to infrastructure limitations in rural areas.

The proposed amendments would allow mobile and fixed-line private operators to offer wireless local loop technology, which uses small radio dishes on top of buildings, where infrastructure is lacking.

Operators will have to apply for the new unified licence to take advantage of the change in regulations.

There are three fixed-line operators and four mobile phone operators in Sri Lanka, handling over 950,000 fixed lines and 1.6 million mobile lines, according to the Central Bank.

Sri Lanka Telecom is the largest fixed-line operator, with an 88 percent market share in 2003. The state owns 49.5 percent, with Japan's Nippon Telegraph and Telephone Corp. holding 35 percent.