Dialog 4Q dented by hefty forex translation losses

The country’s largest mobile telecommunications operator – Dialog Axiata PLC (Dialog) group – saw its net profit for the quarter ended December 31, 2015 (4Q15) falling 58 percent to Rs.620.5 million from a year ago, due to extended foreign exchange losses, the interim financials showed. 

The earnings per share (EPS) fell to 8 cents from 18 cents. 

On a quarter-on-quarter basis too, the December quarter net profit demonstrated a 9.3 percent contraction.The 4Q15 of the group saw its non-cash translational foreign exchange losses extending to Rs.2.2 billion from Rs.1.4 billion during 3Q15, due to the 9.2 percent depreciation in the rupee. 
The group top line however rose by 15.6 percent year-on-year (YoY) to Rs.20 billion led by the ‘mobile unit’. 

Meanwhile, the group for the year ended December 31, 2015 posted a net profit of Rs.5.2 billion (EPS of 64 cents), down 14.8 percent.      

The group top line grew by 9.8 percent to Rs.73.9 billion. 

“Robust revenue growth combined with operational efficiencies derived through cost management initiatives resulted in group earnings before interest tax and depreciation (EBITDA) for FY 2015 growing by 14 percent YoY to reach Rs23.8 billion,” the company said in a statement. 

The group EBITDA margin for the full year is 32.2 percent, the statement added.  
Notably, the group finance cost shot up from Rs.819.4 million to Rs.3.24 billion, an increase of 300 percent. Short-term borrowings have risen by Rs.5 billion to Rs.9.5 billion but the long-term borrowings were Rs.9.6 billion lowerat Rs.15.9 billion. However, the cash flow statement showed a Rs.12 billion worth of debt retirements. 
The segmental results demonstrate the group’s mobile operation increasing its net profit by 9 percent to Rs.7.8 billion. The segment revenue was Rs.62 million, up 8.4 percent.  

Dialog now has a mobile subscriber base of 10.8 million.  

Meanwhile, the fixed telephony and broadband operation narrowed its net losses to Rs.133 million from Rs.941 million a year ago. The revenue rose from Rs.5.4 billion to Rs.6.2 billion during the year.   
The group invested a hefty Rs.19.6 billion on high-speed broadband infrastructure during the year.
 
It was only this week Prime Minister Ranil Wickremesinghe hinted a move to tax capital in the future, a measure which will discourage investments and thus job creation and hamper productivity. 
Dialog Television (DTV) unit however turned a net loss of Rs.314 million from a net profit of Rs.243 million. 

“Cost expansion arising from aggressive customer acquisition alongside service and product expansion activities, resulted in a medium-term contraction in DTV’s EBITDA by 30 percent on a YoY basis. DTV EBITDA for FY 2015 was recorded at Rs.609 million,” the company statement stated. 

The segment’s revenue rose from Rs.4.7 billion to Rs.5.7 billion. DTV has a subscriber base of 650,000 by end-December 2015, up from 600,000 three months ago. 

Meanwhile, the group has paid a total of Rs.27.6 billion to the government in the form of taxes and levies during the year. Direct taxes, fees and levies amounted to Rs.12.7 billion while the additionally collected consumption was Rs.14.9 billion. This includes the telecom levy collection amounting to Rs.11.7 billion. 

Further, the retrospective one-off tax imposed by the government has an estimated cost of Rs.2.04 billion to the group – Rs.1.79 billion of Super Gains Tax and Rs.250 million of Mobile Telephone Operator Levy. 

As of December 31, 2015, the parent, Axiata Investments (Labuan) Limited, held a 83.32 percent stake in the company, while the state-controlled private sector pension fund, the Employees’ Provident Fund (EPF), held a 1.8 percent stake, shedding its stake from 2.18 percent in end-September, being the third largest shareholder of the company.

Norges Bank, the world’s biggest sovereign wealth fund with about a trillion dollars invested in equities, is now featured as the sixth largest shareholder of the group with a 0.8 percent stake.