Wednesday 10 May 2017

Sri Lanka's Dialog posts 5% revenue growth in First Quarter, 28% increase in tax remittances

Sri Lanka's premier telecommunications service provider, Dialog Axiata PLC announced its consolidated financial results for the three months ended 31st March 2017. Financial results included those of Dialog Axiata PLC (the 'Company') and of the Dialog Axiata Group (the 'Group').

The Group continued its growth momentum across Mobile, Tele-infrastructure and Fixed Line businesses to record a consolidated Revenue of Rs. 22.2 billion for Q1 2017, demonstrating a growth of 5% Year-on-Year ('YoY').

However, the First Quarter Revenue contracted 3% relative to Q4 2016 as consumer spending was restrained by increased consumption taxes on communication services spanning Mobile, Fixed, Broadband and Pay Television.

Group EBITDA for Q1 2017 grew 3% YoY to reach Rs. 7.2 billion whilst Group EBITDA contracted 3% Quarter on Quarter ('QoQ') on the back of drop in Revenue. The Group EBITDA margin for the Quarter was recorded at 32.6%.

The Group NPAT (Net Profit after Tax) declined 42% YoY, impacted by increase in depreciation, net finance cost and forex losses while NPAT demonstrated a growth of 24% QoQ to be recorded at Rs. 1.5 billion driven by lower non-cash translational forex losses as the Sri Lankan Rupee depreciated against the US Dollar by 1.5% in Q1 2017 compared to 2.2% during Q4 of 2016.

The Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs. 10.5 billion to the Government of Sri Lanka (GoSL) during Q1 2017 representing an increase of 28% YoY.

Total remittances included direct taxes and levies (Rs. 3.6 billion) as well as consumption taxes collected on behalf of the GoSL (Rs. 6.9 billion).

Further endorsing Dialog's leadership position in Sri Lanka's fiercely competitive ICT sector, Dialog was awarded the Telecom Service Provider of the Year for the sixth successive year and the Internet Service Provider of the Year for the fifth successive year at the SLIM-Nielsen People's Awards 2017 organized by the Sri Lanka Institute of Marketing (SLIM) and AC Nielsen.

Group capital expenditure for Q1 2017 was recorded at Rs. 4.0 billion representing a capex to revenue ratio of 18%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure aimed at further strengthening the Group's position in Sri Lanka's Broadband sector.

Group Operating Free Cash Flow (OFCF) was recorded at Rs. 1.4 billion for Q1 2017. The Group continued to exhibit a structurally robust balance sheet with the Net Debt to EBITDA ratio being maintained at 1.0x as at end of March 2017.

At an entity level, Dialog Axiata PLC (the 'Company') continued to contribute a major share of Group Revenue (83%) and Group EBITDA (79%). On the back of its Mobile customer base of over 12.2 million subscribers.

Company Revenue grew 2% YoY to reach Rs. 18.3 billion for Q1 2017. Company Revenue contracted 4% QoQ due to restrained consumer spending as alluded to earlier.

Company EBITDA declined 9% YoY to record Rs. 5.7 billion for Q1 2017 on the back of moderate Revenue growth and increased cost arising from expansion of network and IT capabilities. In line with performance dynamics at EBITDA level and forex losses, Company NPAT declined 43% YoY and 12% QoQ to record at Rs. 1.7 billion.

Dialog Television (DTV) continued to consolidate its leadership position in the Digital Pay Television space with the subscriber base surpassing 866,000 as at end March 2017. Revenue declined 5% YoY and 1% QoQ to record at Rs. 1.5 billion for Q1 2017 with subscription Revenue growing 3% YoY, whilst EBITDA was recorded at Rs. 65 million for Q1 2017, increased 108% YoY and contracted 12% QoQ. DTV NPAT recorded a Net Loss of Rs. 311 million for Q1 2017 relative to a Net Loss of Rs. 182 million in the corresponding period of 2016.

Dialog Broadband Networks (DBN) recorded Revenue of Rs. 2.9 billion for Q1 2017, representing an increase of 39% YoY and 14% QoQ. Downstream of strong Revenue performance, DBN EBITDA for Q1 2017 was recorded at Rs. 1.5 billion, representing an increase of 100% YoY and 23% QoQ. On the back of healthy EBITDA performance, DBN NPAT turned positive to record a Net Profit of Rs. 237 million for Q1 2017 relative to a Net Loss of Rs. 119 million in the corresponding period of 2016.

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