The Group NPAT was driven by strong performance at the Company level, with Dialog Axiata Plc featuring the Group’s mobile business, posted a profit of Rs. 1.56 bn for Q4 and taking the full year profit to Rs. 6.55 bn, an increase of 171% relative to 2009. Performance during 2010 was underpinned by a healthy momentum in revenue growth, positive outcomes of strategic cost rescaling, balance sheet restructuring initiatives and consistent financial discipline across all aspects of the business.
Subsidiaries Dialog TV (DTV) and Dialog Broadband (DBN) registered gains YoY at both EBITDA and NPAT levels, demonstrating traction in terms of the Group’s Fixed Line, Broadband and Television businesses. Relative to 2009, EBITDA (positive) and NPAT (negative) improved by 243% and 80% for DTV and 169% and 50% for DBN respectively.
Dialog Group revenues were recorded at Rs. 41.42 bn for the year 2010, up 14% YoY and 2% Quarter on Quarter (QoQ).
The Group EBITDA was recorded at Rs. 15.08 bn, up 55% YoY, and down by a marginal 2% on QoQ basis. The Group EBITDA margin improved by 9 percentage points YoY, to reach 36%. Underpinned by the positive EBITDA growth trajectory, the Group NPAT recorded a strong growth of 141% YoY. The Group NPAT for the 4th Quarter however displayed a 25% reduction when compared to Q3 2010, driven largely by higher depreciation and lower foreign exchange gain in Q4 2010.
Strong growth in mobile business
The Company continued to leverage its market leading position within Sri Lanka’s mobile market to deliver strong growth in revenue and profitability. The company recorded revenues of Rs. 9.89 bn and Rs. 37.95 bn for Q4 and FY 2010 respectively. The Company revenue grew by 14% compared to 2009 and 2% relative to the previous quarter. The Company’s revenue trajectory was driven by the growth in Mobile Voice/VAS, mobile broadband, Global and Tele-infrastructure businesses.
The company continued to extract positive outcomes from strategic cost rescaling initiatives. Operating costs (excluding depreciation and non-recurring charges for 2009) reduced by 8% in FY 2010, while remaining flat on QoQ basis. Operating cost improvements YoY were driven primarily by reductions in operational overheads and manpower related expenses. Direct cost (excluding depreciation) grew by 9% YoY (6% when normalised for interconnect costs introduced in 2010) and 11% QoQ. Increase in direct cost was driven in the main by international origination costs and outbound roaming costs in tandem with revenue growth accruing from the corresponding lines of business.
On the backdrop of strong revenue growth and cost improvements, the Company EBITDA for 2010 grew by 43% YoY to reach Rs. 14.46 bn. The EBITDA margin expanded from 30% in 2009 to 38% in 2010 — an increase of 8 percentage points compared to 2009. EBITDA for Q4 2010 however reduced by 4% to Rs. 3.60 bn, in line with the increase in direct costs alluded to above.
The Company NPAT for 2010 was recorded at Rs. 6.55 bn a 306% improvement relative to the normalised (excluding one-off network modernisation charge in 2009) NPAT of negative Rs. 3.2 bn in 2009. In addition to strong EBITDA performance, the improvement in NPAT was underpinned by a 65% YoY decrease in finance costs following the deployment of surplus operating cash for the repayment of borrowings. The year 2010 also posted foreign exchange gains of Rs. 686 mn against an exchange gain of Rs. 8 mn in 2009. The Company NPAT however displayed negative growth of 18% on a QoQ basis, in line with the reduction in EBITDA, higher depreciation and lower foreign exchange gain during the same period.
DBN and DTV consolidate performance improvements
DBN featuring the Fixed Telephony, Fixed Broadband and Data Transmission businesses of the Dialog Group continued to consolidate its positive performance trend recording its third successive quarter of positive EBITDA. DBN EBITDA was recorded at Rs. 285 mn, for 2010 a significant 169% improvement compared to 2009. EBITDA improvement was driven in the main by substantial reductions in operating and direct costs accruing from cost rescaling programmes implemented over the past quarters. DBN EBITDA in Q4 2010 show a reduction of 32% on a QoQ basis, due to an exceptional provision of Rs. 100 mn with respect to VAT recovery in the context of the emergent VAT exempt environment in the Telecommunications sector. On the backdrop of lower EBITDA and the ongoing acceleration of depreciation pertaining to DBN’s CDMA and Wimax networks, NPAT was recorded at negative Rs. 348 mn and negative Rs. 1.3 bn in Q4 2010 and FY 2010 respectively. Accordingly, NPAT for FY 2010 recorded an improvement of 50% compared to 2009.
DTV demonstrated similar consolidation of performance improvements, recording an EBITDA of Rs. 343 mn for 2010, an improvement of 159% and 243% on QoQ and YoY basis respectively. EBITDA growth YoY was underpinned by a strong increase in usage revenues on the backdrop of reductions in operating and direct costs accruing from a continued focus on strategic cost rescaling initiatives. Accordingly, DTV reported a NPAT for FY 2010 of negative Rs. 154 mn a strong improvement in profitability of 80% relative to 2009.
Healthy free cash flows bolster group balance sheet
Group operating cash flows totalled Rs. 14.28 bn for the year of 2010, up 32% relative to 2009. Strong operating cash flows combined with a prudent and strategic approach to capital expenditure, have underpinned the generation of free cash flow of Rs. 8.2 bn for the year of 2010 relative to the negative free cash flow of Rs. 133 mn in the previous year. Positive free cash flows were directed towards de-leveraging the Company’s balance sheet, resulting in a reduction of the Group’s total debt outstanding by 17% YoY. Accordingly, the Dialog Group continued to maintain a structurally strong balance sheet with the Gross Debt to EBITDA ratio improving from 2.6x in 2009 to 1.8x in 2010
On the back drop of a strong balance sheet, free cash position and improved profitability Dialog Axiata effected a repayment of USD 10 mn against advances due to principal shareholder Axiata Group BhD. Subsequent to the aforesaid repayment, the USD and SLR advances outstanding to Axiata Group amount to USD 37.5 mn and Rs. 3,724 mn respectively.
In the light of the company’s strong turnaround in performance, the Board of Directors of Dialog Axiata, resolved, to propose for consideration by the shareholders of the company, a cash dividend to ordinary shareholders of twenty cents (Rs. 0.20) per share totalling to Rs. 1.6 bn. The said dividend would be exempt from tax in the hands of the shareholders. The dividend so proposed is subject to the approval of the shareholders at the Annual General Meeting (AGM) of the company, the date pertaining to which would be notified in due course.
Dialog Axiata Plc, an ISO 9001 certified company, is a subsidiary of Axiata Group Berhad. Dialog is the undisputed leader in Sri Lanka’s mobile telephony sector. The company operates 2.5G and 3/3.5G mobile communications networks supporting the very latest in multimedia and mobile Internet services. Dialog’s domestic coverage spans all provinces of Sri Lanka, while the company’s international roaming network spans over 200 countries. DBN, a fully owned subsidiary of Dialog Axiata Plc operates CDMA WLL Fixed Telephony, and WiMAX 16d Broadband Wireless Access Networks, and is a key player in Sri Lanka’s ICT Infrastructure sector. DTV, also a fully owned subsidiary, operates Dialog TV, Sri Lanka’s leading digital satellite television service.
Dialog first to top $ 1 b FDI; Commits $ 150 m more
Sri Lanka’s flagship telecommunications provider, Dialog Axiata Plc, entered into an agreement with the Board of Investment of Sri Lanka (BOI) to invest a further USD 150 million towards the advancement and expansion of ICT infrastructure in Sri Lanka.
Minister of Economic Development, Basil Rajapaksa, witnessed the execution of the investment agreement by Chairman and Director General of the BOI, Jayampathi Bandaranayake, and Chairman of the Dialog Axiata Group, Datuk Azzat Kamaludin.
In concert with the signing of the investment agreement, the Board of Investment of Sri Lanka announced the recognition of Dialog Axiata as the first company under its aegis to reach the Foreign Direct Investment milestone of USD1 billion. Dialog Axiata surpassed the USD 1 billion cumulative investment milestone as at 31 December 2010, and at the completion of the incremental network expansion programme would reach a total investment of approximately USD 1.2 billion since inception.
To mark the occasion of crossing the USD 1 billion investment milestone, the Chairman of Dialog Axiata Plc was felicitated by the Minister of Economic Development with a memento signifying the Government’s appreciation for the contribution of the Dialog Axiata, and the Axiata Group Bhd., Malaysia towards the development of Sri Lanka’s ICT sector.
Axiata Group Berhad (then Telekom Malaysia) made its first investment in Sri Lanka in 1994. Supported by the progressive enabling environment facilitated by the BOI and the Government of Sri Lanka, its subsidiary Dialog went on to accomplish many firsts in the region – including the launch of the first digital cellular network in the region in 1995 and the first 3G network in 2006.
“On this occasion, we wish to extend our gratitude to the Government of Sri Lanka, the Board of Investment and the Telecommunications Regulatory Commission of Sri Lanka for the progressive investment, regulatory and development policies they have espoused on a consistent basis. The enabling environment they have and continue to provide investors, has underpinned our faith in, and commitment to, Sri Lanka. Axiata Group is proud to serve the people of Sri Lanka and we will continue to contribute our utmost towards ensuring Sri Lanka’s ICT sector matches world class standards,” said Datuk Azzat Kamaludin, Chairman of Dialog Axiata Group.
Dialog Axiata leads Sri Lanka’s burgeoning mobile market with a 7 million strong customer base and an infrastructure footprint which comprehensively covers all 9 provinces of the country. Dialog’s mobile network delivers a cutting edge portfolio of GSM/EDGE and 3.5G HSPA, based services. The Dialog Group also operates the country’s largest Direct-to-Home digital pay television service and is aggressively engaged in expanding its share of the country’s fixed telecommunications services market leveraging its WiMAX 16D, CDMA 450 and Optical Fibre Network (OFN) infrastructure. Since its listing in 2005, Dialog continues to be one of the largest capitalised companies on the Colombo Stock Exchange.
In addition to being a catalyst of ICT growth in Sri Lanka, Dialog has been consistent in its commitment towards the empowerment of Sri Lankan citizens and communities. Signifying its consistent contribution to socio-economic development, Dialog has topped the country’s Corporate Accountability index over the past two years. Principal among Dialog’s social investments are Nenasa, Sri Lanka’s Digital Distance Learning bridge set up in collaboration with the Ministry of Education and the National Institute of Education, slated to connect 1,000 schools via digital broadcast technology, and the development of human capital via the Dialog Scholar programme which has to date supported close to 500 high performing students from across all 25 districts of Sri Lanka.
Dialog Axiata Plc, an ISO 9001 certified company, is a subsidiary of Axiata Group Berhad. The company operates 2.5G and 3/3.5G Mobile Communications networks supporting the very latest in multimedia and mobile Internet services. Dialog has the distinction of being the first 3G operator in South Asia to commence commercial operations. Its local coverage spans all provinces of Sri Lanka, while international roaming is provided in over 200 destinations. Dialog Axiata, the largest and fastest growing cellular service in Sri Lanka, serves a subscriber base in excess of 6.7 million Sri Lankans
source - www.ft.lk
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