Weak rupee costs Dialog over a billion; 3Q net profit down 60% to Rs.679mn

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One-off, retrospective taxes grab another Rs.2bn

The country’s largest mobile telecommunications operator Dialog Axiata PLC (Dialog) saw its net profits for the quarter ended September 30, 2015 (3Q15) falling by as much as 60 percent to Rs.679.06 million from a year ago due to the weakening rupee. Basic earnings per share fell to 10 cents from 21 cents a year ago. Dialog’s share closed at Rs.11.20 at yesterday’s close unchanged from the previous close.

The Sri Lankan rupee weakened over 7 percent year-to-date and as a result, the local unit of Malaysia’s Axiata Investments (Labuan) Limited booked a “non-cash translational foreign exchange losses” to the tune of Rs.1.4 billion during 3Q15.

However, the adjusted net profit for the foreign exchange loss was Rs.2.1 billion, an increase of 19 percent from a year ago.

Meanwhile, the top line rose by 11 percent year-on-year (YoY) to Rs.18.8 billion as a result of enhanced performance from the major segments.

“On the backdrop of strong revenue growth, Group EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) grew by 7 percent QoQ to be recorded at Rs.6.3 billion for 3Q15,” the company said in a statement.

Meanwhile, 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 Gain Tax and Rs.250 million of mobile telephone operator levy.

This is besides the Rs.18.5 billion paid to the government by the group during the first nine months as taxes. This includes Rs.7.6 billion worth of direct taxes, fees, levies and income tax and Rs.10.9 billion worth of consumption taxes additionally collected on behalf of the state, which comprised of telecom levy collections of Rs.8.6 billion.

The finance costs spiked up to Rs.1.81 billion from Rs.273.51 million last year due to losses arising from foreign exchange.

Meanwhile, for the nine months ended September 30, 2015, the Dialog group net profit edged down to Rs.4.51 billion, from Rs.4.62 billion recorded a year ago. The EPS was 56 cents.

The consolidated revenue increased to Rs.53.89 billion from Rs.50.01 billion a year ago.

In a segmental breakdown for the nine months, the group’s cash cow, the group’s mobile operations revenue, increased to Rs.45.9 billion from Rs.43.3 billion earned during the same period last year, and operating profits rose to Rs.7.92 billion from Rs.6.51 billion.

Fixed telephony and broadband revenue for the same period rose to Rs.5.33 billion from Rs.4.5 billion a year ago, but suffered an operating loss of Rs.5.69 million but improving from a Rs.892.98 million loss for the same period last year.

Dialog’s digital television subscriber base rose by 189,000 subscriptions during the nine months, totalling a subscriber base of over 600,000. Television revenue for the period rose to Rs.4.26 billion from Rs.3.40 billion a year ago, but operating profits fell to Rs.13.71 million from Rs.283.93 million a year ago.
Dialog said that the television operation costs expanded for the period due to aggressive customer acquisition alongside service and product expansion activities.

The group said that it had invested Rs.9.7 billion towards creating high-speed broadband infrastructure during the nine months, and that it is has signed agreements with the Board of Investment to invest a further Rs.24.6 billion for the same purpose.

This is set to bring Dialog’s total investment in the country to US $ 1.96 billion or Rs.206 billion, becoming the single largest foreign direct investor in the country.

As of September 30, 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 held a 2.18 percent stake, being the third largest shareholder of the company.

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Weak rupee costs Dialog over a billion; 3Q net profit down 60% to Rs.679mn

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