SLT profits dip; cites heavy investments

Sri Lanka Telecom Plc said yesterday heavy investments have impacted the group’s profits in the first nine months of this year though the top line grew.

The group reported revenue of Rs. 56.4 billion with year-on-year growth of 1.3%. The marginal increase of mobile-related revenues, mainly due to tax increases, has resulted in the lower than expected revenue growth of the company. 

During the period under review Group Operating Costs amounted to Rs. 40.26 billion with a 1.5% year-on-year increase. 

The measures taken to control the costs and reductions in revenue-related direct costs at the group level have enabled the group to minimise the operational costs. Group EBITDA remained almost flat, owing to the low increase of revenue. The Group Operating Profits dipped to Rs. 3.4 billion as a result of the heavy increase in depreciation. Substantial investments by the holding company have resulted in the increase in depreciation. Profit before Tax and Profit after Tax of the group dipped to Rs. 4.1 billion (down from Rs. 6 billion a year earlier) and Rs. 3.2 billion (down from Rs. 4.6 billion a year earlier) respectively. 

Sri Lanka Telecom Plc (SLT) reported revenue of Rs. 33.4 billion during the nine months ending 30 September 2017 with a year-on-year growth of 3.1% compared to the corresponding period of the previous year. 

Despite the competitive pressures and changes in taxes, the introduction of new technologies such as LTE and FTTH and expansion in data-related products have driven growth. Operating costs of the company amounted to Rs. 24.7 billion with a 1.6% year-on-year increase during the period under review. Company EBITDA grew by 7.5% year-on-year to Rs. 8.7 billion.

During the last few years the company continued to invest heavily in network expansions, introducing new technologies such as LTE and FTTH. IDC and IPTV expansions were also carried out to enhance and provide a better customer experience. Subscribing to the SE-ME-WE 5 international submarine cable in order to enhance the connectivity to the globe was also amongst the key investments. 

In the first nine months the SLT Group’s net investments amounted to Rs. 21.2 billion, up from Rs. 15.5 billion in the corresponding period of last year.

As a result, the company depreciation escalated to Rs. 8.2 billion during the period under review with a year-on-year growth of 31%. Despite the increase of company EBITDA, owing to growth of depreciation, the company’s Operating Profits dipped year-on-year to Rs. 0.507 billion.