SLT says 4Q and FY23 results impacted by macro-economic challenges

• Optimistic on future SLT-Mobitel forecasts

The Sri Lanka Telecom yesterday said the Group’s financial results for the fourth quarter and financial year ending 31 December 2023, reflects a downturn in performance amidst a turbulent macro-economic environment in the country.

For 4Q 2023, SLT Group reported a year-on-year consolidated revenue degrowth of 7.5% amounting to Rs. 26 billion compared to Rs. 28 billion in 2022. The Group’s profits decline was attributed to reduced revenue, despite the efforts of cost optimisation measures that resulted in a 5.9% reduction in Operating Expenses (Opex). 

Consequently, the Group saw a corresponding decline in operating profit, with both Profit Before Tax (PBT) and Profit After Tax (PAT) experiencing decreases in the quarter.

At SLT level, a 3.6% Opex reduction was posted for 4Q 2023 compared to 4Q 2022, attributed mainly to a well-managed cost reduction in staff costs. Further, SLT saw cost savings in other areas credited due to a reduction in advertising and activation costs, with repair and maintenance costs also decreasing during the latter part of 2023. However, these savings were outweighed by a fall in the top line and increase in depreciation, driving overall losses.

Overall, in the financial year of 2023, the Group’s operational costs rose by 9.4% to Rs. 74 billion compared to Rs. 68 billion in 2022, mainly due to increased electricity tariffs. Additionally, other costs, including annual maintenance contract costs, vehicle hiring, fuel, and repair costs, contributed to the overall cost increase year-on-year.

Furthermore, over the twelve-month period of 2023, the Group experienced a loss of Rs. 3.9 billion, contrasting sharply with the profit of Rs. 4.8 billion recorded in 2022, reflecting a staggering decline of 182.3%. Similarly, SLT and Mobitel individually reported losses of Rs. 1.1 billion and Rs. 3.6 billion for the year, respectively. Additionally, the Group’s revenue experienced a marginal degrowth of 1.2%, amounting to Rs. 106.4 billion, compared to the revenue of Rs. 107.7 billion in the financial year of 2022.

Offering a positive trend compared to 3Q 2023, the Group recorded a 13.2% reduction in Opex from 3Q to 4Q and a decrease in net losses from Rs. 1.5 billion in 3Q to Rs. 1.2 billion in 4Q. Moreover, the Group recorded an operating profit of Rs. 549 million in 3Q 2023, followed by a surge to Rs. 1.2 billion in 4Q 2023, indicating optimistic future forecasts.

Despite the performance decline over previous year, Mobitel showed a 3% growth in revenue and improvement in profitability parameters in the second half of 2023 over the first half of the year. The EBITDA reported a 9% growth and operating loss have reduced by 54% during the period as a result of company’s top line growth and cost optimisation efforts.

SLT-Mobitel CEO Janaka Abeysinghe said, “Looking ahead, macro-economic uncertainty persists. Despite the year-on-year decline in profitability, we are optimistic and see encouraging signs for 2024. Our cost base is under continuous review and adjusted to match market conditions. Given these fundamental strengths, we believe we will overcome negatives in these challenging markets and are confident in driving the long-term profitability of the Group.” 

The Group remains committed to financial prudence and business continuity while hoping for improved economic forecasts ahead, SLT added.