- 2Q17 net profit up 2.5% to Rs.2.34bn
- 1H17 net down 22% to Rs.3.89bn
- Collects Rs.13.4bn in consumption taxes for govt.
- Pays Rs.5.7bn in income taxes in 1H17
- Pay TV subscribers increase, losses expand
According to the recently released interim financial accounts of Dialog Axiata PLC, the top and bottom lines of the country’s leading mobile telephony services provider appear to have felt the pinch of the current slowdown in consumer spending.
The company reported earnings of 29 cents a share or Rs.2.34 billion for the April-June quarter (2Q17), barely up from Rs.2.28 billion profit a year ago, which is just a 2.5 percent growth year-on-year (YoY). The Dialog share closed 10 cents or 0.88 percent higher at Rs.11.40, yesterday.
The profits were somewhat supported by relatively lower non-cash translational forex losses during 2Q17 compared to 1Q17, the company said in a statement.
Meanwhile, the three months EBITDA (earnings before interest tax depreciation and amortisation) rose by 13.0 percent on a quarter-on-quarter basis to Rs.8.1 billion, the company said.
However, for the six months ended in June 30, 2017, the earnings fell by as much as 22 percent YoY to 48 cents a share or Rs.3.89 billion on revenue of Rs.45.2 billion, up just 7.0 percent YoY.
The company said during the 1H17, it collected as much as Rs.13.4 billion in consumption taxes on behalf of the state and was liable for Rs.5.7 billion direct taxes and levies.
For the quarter, the growth in revenue was only 9.0 percent YoY to Rs.23.0 billion.
This demonstrates a moderation of revenues across mobile, fixed telephony, broadband and pay television businesses due to increased consumption taxes, the company statement said.
Meanwhile, the floods in May have also impacted the performance during 2Q17. “The 2Q17 performance was impacted by externalities including the inclement weather and severe flood conditions during the month of May that dealt a significant impact on livelihood and commerce,” the statement added.
Since last year, the telecommunication services sector was slapped with heavy taxes as a result of higher value-added tax and every subscriber of mobile, data or pay television pays effectively 49 percent as taxes on the monthly bill.
The group’s key mobile business, though reporting an increase in the top line by about 5.0 percent YoY to Rs.37.8 billion for the six months, the operating profits fell by about a billion rupees to Rs.5.8 billion. Dialog Mobile now has about 12.4 million subscribers.
The group fixed telephony and broadband operation recorded revenue of Rs.5.9 billion, an increase of 34.0 percent YoY and the operating profits rose to Rs.872.3 million from Rs.23.0 million.
Meanwhile, the pay television unit of the group, which has about 910,000 subscribers, expanded its operating losses to Rs.353.5 million from Rs.196.2 million a year ago on a virtually flat revenue base of Rs.3.0 billion.
The sector analysts argue that the group’s broadband unit is competing with the pay TV business as the former has more utility than the latter, which is slowly becoming obsolete at a time when people increasingly tend to watch the live streaming of the same programme.
Nowadays people spend more time before their smartphone or laptop screens than on a boring television screen, which is no more the hottest thing in town.
The advertisers are also increasingly shifting their top dollars into digital marketing from traditional electronic media, which are fast losing the appeal.
As of June 30, 2017, Malaysia’s Axiata Investments (Labuan) Limited held a 83.32 percent stake in Dialog while the state-run Employees’ Provident Fund held another 2.22 percent stake being the second largest shareholder.