Dialog’s Performance Trend Strengthens in 3rd Quarter

Dialog Telekom PLC announced, its financial results for the quarter ended 30 September 2009. Key performance metrics of Dialog Telekom PLC (the “Company”) continued to improve in Q3 2009 consolidating the positive performance trend set in the previous quarters. In the 3rd Quarter, Company EBITDA improved by 11% relative to the previous (2nd) Quarter on a normalised (corrected for one-off non recurring items) basis. Normalised EBITDA was recorded at Rs 2,355 Mn in Q3. In tandem with EBITDA improvement, Net Profit After Tax (NPAT) was recorded at Rs. 313 Mn. up from negative Rs. 5 Mn (excluding one-off network modernisation and other non-recurring charges) in the previous quarter. Performance enhancements were achieved through robust revenue growth in tandem with an aggressive approach to de-scaling of the Company’s operating cost structure. Company Revenue grew by 2% QoQ and 5% relative to Q1 2009 while operating costs, (corrected for non-recurring charges in Q1 and Q2) reduced by 5% and 8% over the respective periods.

Year to date (YTD) NPAT inclusive of a Rs. 6 Bn. Network modernisation charge applied in Q2 2009 was recorded at negative Rs. 8,050 Mn. The Company achieved YTD revenues of Rs. 23,803 Mn. – down 5% relative to the corresponding period in 2008 on the backdrop of tariff reductions across the sector. Normalised EBITDA and PAT were recorded at Rs. 6,331 Mn. and negative Rs. 233 Mn. on YTD basis – down 19% and 108% respectively relative to 2008.

During the 3rd Quarter of 2009, Dialog continued to register positive gains in the mobile market on the backdrop of aggressive price competition. The Company added 336,250 (net) new subscribers during Q3 2009 increasing its subscriber base to 6.33 Mn. representing a 27% growth YoY and a 6% growth relative to Q2 2009. Total Operating costs reduced by 1% QoQ and by 4% relative to Q1 2009 reinforcing the efficacy of strategic cost rescaling activities undertaken by the Company over the previous quarters. Direct costs excluding depreciation and non-recurring charges, however grew by 2% QoQ. Direct cost increases were driven by increase in termination cost, international origination cost and roaming expenditure largely in tandem with revenue growth in the corresponding lines of business. Levies payable to the GoSL remain a significant driver of direct costs, with the company remitting a sum of Rs. 2.13 Bn. in direct and indirect levies to the GoSL, up 7% QoQ from the corresponding figure of Rs. 1.98 Bn. in Q2 2009. The impact on the Profit and Loss Statement accruing from GoSL levies was recorded at Rs. 1,005 Mn.

Normalised Operating profit (EBITDA) improved by 11% QoQ and 27% relative to Q1 2009 to reach Rs. 2,355 Mn., recording a robust 29% EBITDA margin with commensurate improvement in the Company’s Operating Cash Flow. EBITDA inclusive of non-recurring charges was recorded at Rs. 2.27 Bn., up 38% relative to the preceding quarter. Non-operating costs excluding nonrecurring charges totalled to Rs. 1.98 Bn., a decrease of 6% on a QoQ basis, mainly attributable to de-scaling of depreciation following the network modernisation exercise accounted for in the previous quarter.

The Company recorded a Net Profit After Tax (NPAT) (inclusive of non-recurring charges) of Rs. 313 Mn. Normalised NPAT was recorded at Rs. 370 Mn. compared to the normalised figure of negative Rs. 5 Mn. recorded in the previous quarter.

Dialog Group (“Group”) performance derived from the consolidation of the Company with its subsidiaries Dialog Television (Pvt) Ltd (“DTV”) and Dialog Broadband Networks (Pvt) Ltd (“DBN”), recorded consolidated revenue of Rs. 8,945 Mn. for Q3 2009, an increase of 2% relative to the adjacent quarter and a decline of 5% YoY. Group costs excluding depreciation and non-recurring charges exhibited 1% reduction QoQ and 4% relative to Q1 2009. DTV recorded a Pay TV subscriber base of over 141,000 active subscribers as of Q3 2009 representing a 3% QoQ growth and a 20% growth YoY. DTV’s NPAT was recorded at negative Rs. 108 Mn. showing a reduction in losses by 52% relative to Q2 2009.

DBN revenue remained flat QoQ at Rs. 581 Mn. down marginally from the Q2 figure of Rs. 585 Mn. The fixed line CDMA subscriber base as at the end of Q3 2009 remained at 175,550. DBN’s Broadband and internet based service segment continued to exhibit aggressive growth with revenue increasing by 16% QoQ and 62% YoY, while broadband and internet subscribers recorded a significant growth of 12% relative to Q2 2009 and 82% YoY. DBN’s NPAT was recorded at negative Rs. 632 Mn. in Q3 2009, down 7% on a QoQ basis.

Inclusive of subsidiary performance as set out above, normalised Group EBITDA recorded an improvement of 10% QoQ at Rs. 2,297 Mn. Cumulative normalised Group EBITDA was recorded at Rs. 6,080 Mn. for the first 9 months of 2009. Group PAT inclusive of all non-recurring charges was recorded at negative Rs. 439 Mn. for the quarter with cumulative Group NPAT being negative Rs. 9,975 Mn. for the 9 months ended 30 September 2009. On normalised basis however, Group PAT for the 3rd Quarter was computed at negative Rs. 198 Mn. – a 66% improvement on QoQ basis.

In line with the strengthening performance trend characterised by aggressive growth in revenues, re-scaling of cost structures and improvements in working capital management, Group operating cash flows reached Rs. 8,190 Mn., increasing two-fold on an YTD basis relative to the corresponding period in 2008.