Dialog Improves Profitability in Q1 due to Favorable Forex, Margins Impacted by Inflation

12th May 2023         Colombo


  • Q1 23 Revenue recorded at Rs 50.1Bn, down 2% QoQ and up 31% YoY
  • Q1 23 EBITDA recorded at Rs.13.0Bn, up 30% QoQ and down 12% YoY
  • Q1 23 NPAT Positive at Rs8.7Bn to Record over 100% Growth both YoY and QoQ.
  • Total Taxes Paid to GoSL Rs12.2Bn which included Rs4.2Bn in Direct and Rs8.0Bn in Indirect Taxes
  • Capex Investments of Rs5.2Bn during the Quarter; OFCF reached Rs4.9Bn for Q1 2023

Dialog Axiata PLC announced its consolidated financial results for the three months ended 31st March 2023. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

The Macro environment continued to improve in Q1 2023 as indicators such as exchange rate and Inflation moved in the favourable direction QoQ though settling at elevated levels relative to Q1 2022. As a result of the prolonged high inflationary impact top line growth and margins remain depressed.

The Group concluded the quarter with positive revenue performance being recorded across all business segments, namely, Mobile, Fixed Line, Digital Pay Television, International and Tele-infrastructure to record a consolidated Revenue of Rs50.1Bn for Q1 2023, demonstrating a strong growth of 31% Year-on- Year (“YoY”). However, a Revenue decline of 2% Quarter-on-Quarter (“QoQ”) was recorded due to drop in international Revenue due to LKR appreciation against the USD together with Revenue drop witnessed in Voice, Data and TV due to consumer wallet pressure. Despite positive YoY revenue performance, the elevated cost base led to Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) declining 12% YoY to record at Rs13.0Bn. During the same period inflation measured by point to point annual change in consumer price levels was recorded at 50.3% and YoY depreciation of the currency was recorded at 11.3%. However, as a result of multiple cost rescaling initiatives, EBITDA recorded a growth of 30% QoQ.

The Group Net Profit After Tax (“NPAT”) was recorded at Rs8.7Bn for Q1 2023 recording a growth exceeding 100% on both YoY and QoQ basis. The Sri Lanka Rupee (“LKR”) appreciated against the United States Dollar (“USD”) by 10.6% during the quarter resulting in a forex gain for the group. Normalised for the forex gain a Net Loss was recorded as Rs.0.2Bn for Q1 2023, up 98% QoQ albeit down 104% YoY.

Dialog Group continued to be a significant contributor to state Revenues, remitting a total of Rs12.2Bn to the Government of Sri Lanka (“GoSL”) during Q1 2023. Total remittances included Direct Taxes and Levies amounting to Rs4.2Bn as well as Rs8.0Bn in Consumption Taxes collected on behalf of the GoSL.

The Group remained steadfast to meet growing demand from both retail and corporate sectors, whilst also ensuring seamless customer experience and leadership in Sri Lankas’ Broadband and ICT sectors. Dialog mobile network was recognised by third party network monitoring platform1 as the leader across all categories for experience, coverage and consistency. The capital expenditure for Q1 2023 reached Rs5.2Bn representing a drop of 30% YoY. As a result of stable exchange rate and lower capex, the Group recorded Operating Free Cash Flow (“OFCF”) of Rs4.9Bn for Q1 2023 up over 100% QoQ though declining 21% YoY.

On 2nd of May 2023, Dialog Axiata Plc (“Dialog”), Axiata Group Berhad (“Axiata”) and Bharti Airtel Limited (“Airtel”) (collectively “the Parties”), announced the entering into of a binding term sheet to combine operations of Bharti Airtel Lanka (Private) Limited, Airtel’s wholly-owned subsidiary with Dialog. The proposed transaction envisages Airtel being granted a stake in Dialog, representing the fair value of Airtel Lanka. Airtel would accordingly be issued new shares in Dialog upon completion of the transaction. Discussions with respect to the proposed transaction are ongoing between the Parties and also with the relevant regulatory authorities as per applicable laws and regulations. The proposed transaction is subject to signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals.

The quarter also marked Dialog Group being recognized with multiple awards spanning brand recognition, sustainability reporting and digital inclusion initiatives. Sri Lankan consumers voted Dialog as the ‘Telecommunication Brand of the Year’ for a record twelfth year running at the prestigious SLIM-KANTAR People’s Awards 2023. Voted for by the public to recognise brands that have made a profound impression in the minds of the people of Sri Lanka, the People’s Awards crowns the brands that have captured the hearts of the people. The ACCA Sustainability Reporting Awards 2022 recognized Dialog as the Overall Winner and the Winner of the General Services category for its exceptional commitment to sustainability and transparency in reporting. The Company was commended by the judging panel for its country-first strategy, clear understanding of the materiality of sustainability issues and its resolute dedication to addressing them. Dialog Group was also recognised at the prestigious e-Swabhimani Awards 2021, for its outstanding digital inclusion and community investment initiatives, including Sayuru, Yeheli, and Saru for their contribution to inclusion, empowerment, and environmental sustainability.

At an entity level, Dialog Axiata PLC (the “Company”) continued to contribute a major share of Group Revenue (51%) and Group EBITDA (64%). Company recorded a 7% YoY growth in Revenue to reach Rs25.6Bn whilst on a QoQ basis Revenue declined by 3% resulting from drop in Voice and Data. EBITDA was recorded at Rs8.3Bn for Q1 2023 representing a decline of 17% YoY on the back of cost escalations in Network, Sales & Marketing, IT and Manpower. On a QoQ basis EBITDA recorded a growth of 39%. The Company NPAT was recorded at Rs7.6Bn for Q1 2023, increasing over 100% on both YoY and QoQ basis.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with the subscriber base being maintained at 1.7Mn as of end Q1 2023. DTV Revenue reached Rs3.1Bn for Q1 2023, recording a growth of 9% YoY driven by subscription revenue albeit declining 12% QoQ due to drop in advertising revenue. DTV EBITDA recorded a dip of 62% YoY whilst remaining flat QoQ to reach Rs369Mn for Q1 2023 underpinned by expanded cost base from LKR depreciation. However, DTV recorded a NPAT of Rs116Mn contributed by forex gains.

Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded Revenue of Rs21.2Bn for Q1 2023, up 69% YoY albeit declining 1% QoQ. The top line growth was mainly driven by the growth in international wholesale Revenue. The EBITDA for DBN grew 1% YoY and 12% QoQ to record at Rs3.8Bn in Q1 2023. Accordingly, DBN NPAT reached Rs797Mn for Q1 2023 declining by 13% YoY due to higher depreciation resulting from investments in 2022.

More details are available at the following links:
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