Dialog Consolidates Performance with Positive Q1

Dialog Telekom PLC announced, Friday 07th May its financial results for the quarter ended 31st March 2010. Financial results included those of Dialog Telekom PLC (the “Company”) and of the Dialog Telekom Group (the “Group”) post consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd. (“DBN”) and Dialog Television (Pvt) Ltd. (“DTV”).

Dialog Telekom consolidated on positive performance trends of previous quarters to record Net Profit After Tax (NPAT) of Rs. 1,276Mn. and Rs. 705Mn. for the quarter, at Company and Group level respectively, an improvement of 313% and 153% relative to Q1 2009.

Company EBITDA grew by a significant 68% relative to Q1 2009 to reach Rs. 3,343Mn., signifying the 5th successive quarter of EBITDA growth and an improvement of 5% QoQ. Accordingly the 1st Quarter exhibits an EBITDA margin of 37% for the Company, up 12% points YoY and 1% relative to Q4 2009.

Dialog continued to register positive gains in the mobile market during Q1, on the backdrop of aggressive competition. Company Revenue grew by a robust 15% YoY and 2% compared to Q4 2009. Revenue growth in Q1 was driven by the addition of 364,809 (net) new subscribers. Accordingly the Company grew its subscriber base to 6.74 Mn. recording a 15% subscriber growth YoY and a 6% growth relative to Q4 2009.

Complementing positive revenue performance trajectories, the Company continued to demonstrate significant enhancements to its Operating Cost structure. Operating Costs (excluding depreciation) reduced by 13% and 2% relative to Q1 2009 and Q4 2009 respectively, signifying the quantum impact of strategic cost rescaling initiatives undertaken by the Company during previous quarters. Operating cost improvements were driven primarily by reduction in operational overheads, administration, and manpower related expenses. Direct cost (excluding depreciation) grew by 3% YoY and 6% QoQ. The increase in direct cost was driven in the main by termination and origination costs pertaining to International traffic in line with revenue growth accruing from the corresponding lines of business.

In line with growth at EBITDA level, NPAT was recorded at Rs. 1,276Mn., up 313% from a negative NPAT of Rs. 598Mn. in Q1 2009 and representing a 5% improvement QoQ. Strong EBITDA performance was supported by a 20% decrease in non-operating costs relative to Q1 2009. Non Operating cost reductions were driven by a 50% decrease in finance costs following the repayment of borrowings utilising surplus cash from operations. The 1st Quarter also evidenced foreign exchange translation gains of Rs. 106Mn. in contrast with an exchange loss of Rs. 286Mn. in Q1 2009.

Year on Year and Quarter on Quarter comparisons reported for the Company, Subsidiaries and Group performance, exclude non-recurring charges accounted in the corresponding quarters of the previous year (Q1 2009 and Q4 2009). Non-recurring charges for the Company and Group amounted to Rs. 520Mn. and Rs. 542Mn. respectively in Q1 2009, and Rs. 2.37Bn. and Rs. 2.99Bn. respectively in Q4 2009.

Subsidiary Business

As in the case of Dialog Telekom PLC., the subsidiaries of the Company – DBN and DTV exhibited improved performance during the 1st Quarter relative to the corresponding period in 2009. DBN EBITDA recorded at negative Rs. 38Mn., improved by 55% YoY. DTV EBITDA was recorded at positive Rs. 26Mn. in Q1 2010, up 116% YoY. Both subsidiaries remained dilutive to the Group recording negative NPAT levels of Rs. 465Mn. and Rs. 94Mn. respectively.

DBN posted marginal revenue growth of 1% relative to Q1 2009 to record a turnover of Rs. 591Mn. for the quarter. Revenue remained flat (down marginally from Rs. 598Mn.) on an immediate QoQ basis. DBN’s broadband and internet based service segment continued to exhibit aggressive growth with revenue increasing by 26% YoY, driven by broadband and internet subscriber growth of 22% YoY. DBN’s fixed line CDMA subscriber base grew marginally by 1% (on YoY as well as QoQ basis) to reach 179,000.

DTV recorded a revenue of Rs. 490Mn. in Q1 2010, up 33% and 8% relative to Q1 2009 and Q4 2009 respectively. Revenue growth was fuelled by aggressive market performance characterised by the achievement of a cumulative subscriber base of 160,000. Subscriber growth was recorded at 23% YoY and 7% relative to Q4 2009. DTV recorded a positive EBITDA for the first time since acquisition and consolidation within the Dialog Telekom Group, achieving an EBITDA of Rs. 26Mn. for Q1 2010. Notwithstanding the achievement of positive EBITDA, NPAT was recorded at negative Rs. 94Mn. exhibiting a reduction in negative profitability relative to Q1 2009 by 69%.

Consolidated Group Performance

Group performance derived from the consolidation of Company performance with that of its subsidiaries DBN and DTV, featured Group revenue of Rs. 9,791Mn. for Q1 2010, an increase of 16% YoY and 2% relative to Q4 2009 respectively. Cost rescaling initiatives during the course of 2009 demonstrated robust impact at Group Level with Group operating costs exhibiting a 13% reduction relative to Q1 2009.

Accordingly, the Group recorded EBITDA and NPAT of Rs. 3,333Mn. and Rs. 705Mn. respectively, for the 1st Quarter up 89% and 153% relative to Q1 2009.

During the course of Q1 2010, Dialog Telekom won major honours at the SLIM-Nielsen People’s Awards being voted Sri Lanka’s No 1 Mobile Telecom and Youth brand. The Company also scored a significant first in Sri Lanka’s ICT sector becoming the first Company in the country to achieve Customer Operations Performance Center (COPC) 2000® Standard certification for its state-of-the-art contact centre, demonstrating the Company’s commitment to the establishment of best in class service delivery processes and supporting infrastructure.