Sri Lanka's largest mobile operator will expand into the war-torn Jaffna peninsula, as the five-month ceasefire between the government and separatist Tamil Tigers continues to hold.

The $10m investment by MTN Networks, fully owned by Telekom Malaysia, would be the largest private investment in the peninsula since the start of Sri Lanka's civil war in 1983.

The infrastructure is for all people, its not unique to any particular segment, it for civilians as well as military

Nushad Perera MTN

"With the peace process coming in and the freedom of the civilian population, we feel its the right time to go in," MTN general manager Nushad Perera told the BBC's World Business Report.

The government and Tamil Tigers signed a ceasefire agreement in February, which has resulted in the opening of road, sea and air links to Jaffna.

Mr Perera said he was confident that MTN's investment was secure and that if the peace process collapsed they would "jump over that hurdle when that comes".

"The infrastructure is largely in military bases and it is protected by the military and we also have the advantage of pulling out or shutting down the base stations if things go wrong," he said.

Peace talks are scheduled to take place in the next few months.

Loss leader

MTN expects about 5,000 customers to take up the service in the north and the east of the island, where about 2 million people live in the area claimed by the Tamil Tigers as their homeland.

"The infrastructure is for all people, it is not unique to any particular segment," Mr Perera said.

"It is for civilians as well as [the] military."

MTN, which sells Dialog GSM phones, has just under half of the 700,000 mobile connections on the island.

"The investment would not be recovered fully but there would be spin off effects because we cover the rest of the country," Mr Perera said.

MTN's main rival is the fixed-line operator Sri Lanka Telecoms, which is majority state owned, with Japan's Nippon Telegraph and Telephone possessing a 35.2% holding.