Dialog continues profit momentum

Record profit after tax of Rs. 5.25 billion in first-half

GROUP RESULTS: Dialog Telekom PLC recorded a profit After Tax of Rs. 5.25 bn. up 8 per cent relative to the first-half of 2006.

Company earnings comprise in the main of contributions from mobile business supplemented by earnings accruing from the company's International Business Operations and Internet Service Provider Operations.

Dialog Telekom and its subsidiaries (Dialog Broadband Networks and Dialog Television (formerly Asset Media continued to deliver robust growth recording a 43 per cent increase in mobile subscribers YoY and Revenue, EBIDTA and PAT growth of 23 per cent, 17 per cent and 8 per cent respectively.

The inflow of Rs. 15.54 bn via the successfully completed Rights Issue is expected to fuel further aggressive growth in infrastructure and subscribers, while serving to mitigate the funding costs incurred by the company in the 1st half of 2007.

The upturn in macro-economic indices in tandem with the recently concluded clearing operations in the Northern and Eastern Province of Sri Lanka are expected to assist the company in delivering enhanced growth metrics during the 2nd half of the year.

The performance at DT was delivered not withstanding revenue mitigating externalities such as the mitigation of Inbound Roaming revenues due to the reduction in inbound travellers and the intermittent disruption to services in the Northern and Eastern Provinces of Sri Lanka.

Group results of Dialog Telekom PLC, post consolidation with subsidiary performance, recorded a Profit after Tax (PAT) of Rs. 4.87bn for the first-half of 2007, representing a marginal drop by 1 per cent relative to the first half of 2006, precipitated by a negative contribution of Rs 349.51 mn from the recently operationalised subsidiary Dialog Television (Pvt) Ltd (DTV) which had a dilative effect on the profit growth of 8 per cent delivered by the core operations of DT.

Dialog Television is currently in an aggressive subscriber acquisition phase on the backdrop of the rapid expansion of channels.

DTV increased its channel portfolio by 45 per cent in the second-quarter of 2007 thereby establishing a robust product offering for the highly under-penetrated Pay Television market in Sri Lanka.

The Direct to home (DTH) Pay TV business operated by DTV is characterised by a substantial fixed cost base (comprising of satellite capacity costs, minimum payments to content providers and other operation specific fixed costs).

The marginal negative contribution from Dialog Broadband Networks (DBN) accruing from the delay in launch of CDMA Fixed line services due to spectrum clearance and interconnection issues was mitigated to Rs. 7.79 mn.

The negative contribution is expected to be reversed with the successful launch of CDMA operations in six districts during July. DBN will expand its fixed wireless operation into four more districts including Colombo, during the second half of the year.