Dialog consolidates performance with strong 3rd quarter

Dialog Axiata said yesterday it has consolidated its performance in FY12 with a strong third quarter.

It said the Group recorded strong revenue growth across Mobile, International, Digital Pay Television, Tele-infrastructure and Fixed line businesses to record a consolidated revenue of Rs. 41.5 b for the nine months ending 30 September 2012, demonstrating a significant growth of 24% YoY.

Group revenue for Q3 2012 was recorded at Rs. 14.5 b, reflecting growth of 3% QoQ. Group EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) for the first nine months of 2012 was recorded at Rs. 14.2 b, a significant increase of 21% relative to the corresponding period in 2011.

Group EBITDA margin for the nine months ended 30 September 2012 declined marginally by one percentage point on a YoY basis to 34%. Group EBITDA for Q3 2012 was recorded at Rs. 4.9 b up 5% QoQ. The Group EBITDA margin improved by one percentage point QoQ to reach 34%.

Non-operational performance below EBITDA for the first nine months is characterised by noncash translational foreign exchange losses amounting to Rs. 2.5 b, and a one-off write back of the company’s deferred tax provision of positive Rs. 2.3 b.

While non-cash foreign exchange losses accrued due to the devaluation of the SLR by 13.9% YTD, the deferred tax write back was effected subsequent to the company opting for a 2% post-tax holiday revenue tax with effect from 2013, in line with the terms of its Flagship Investor Agreement with the Board of Investment of Sri Lanka.

Group NPAT (Net Profit After Tax) for the nine months ended 30 September 2012 was accordingly recorded at Rs. 5.1 b, a significant improvement of 43% YoY.



Group NPAT improved significantly on a QoQ basis with Q3 2012 NPAT posted at Rs. 4.7 b compared to NPAT of Rs. 879 m in Q2 2012. NPAT growth QoQ is underpinned by the one-off deferred tax write back of Rs. 2.3 b and a non-cash foreign exchange gain of Rs. 447 m in the third quarter, in contrast with a total of Rs. 2.9 b in non cash foreign exchange losses recorded in the previous two quarters.

Group NPAT post normalisation for exceptional gains/charges (consisting of the non-cash foreign exchange loss of Rs. 2.5 b, deferred taxation reversal of Rs. 2.3 b and costs related to the Suntel acquisition amounting to Rs. 343 m), is recorded at Rs. 2 b for Q3 2012 and Rs. 5.6 b for the nine months ended September 2012 demonstrating a significant growth in normalised NPAT performance of 16% QoQ and 76% YoY.

Dialog Axiata PLC, featuring the Mobile, International and Tele-Infrastructure segments of the Group portfolio, continued to contribute a major share of Group Revenue (87%) and of Group EBITDA (88%). Company revenues grew by 19% compared to the 1st nine months of 2011 and 3% relative to Q2 2012. The company’s revenue trajectory was driven by the growth in usage and the continued increase in its mobile subscriber base which was recorded at 7.6 million as at the end of Q3 2012.

On the backdrop of robust performance in revenue, company EBITDA grew by 15% YoY to be recorded at Rs. 12.5 b for the first nine months of the year. Company EBITDA for Q3 2012 was recorded at Rs. 4.3 b an increase of 6% relative to Q2 2012.

On the backdrop of strong EBITDA performance, company NPAT grew by 21% YoY to be recorded at Rs. 5.2 b inclusive of the impact of the deferred tax reversal of positive Rs. 2.3 b and non-cash forex translational loss of negative Rs. 2.5 b. Company NPAT normalised for the exceptional items was recorded at Rs. 5.7 b for the nine months ended 30 September 2012 an increase of 45% relative to the first nine months of 2011.

Dialog Television (DTV) continued its positive growth momentum recording revenue growth of 29% YoY to reach Rs. 2.2 b for the first nine months of 2012. In the backdrop of aggressive revenue growth, YTD EBITDA was posted at Rs. 498 m, a 32% increase YoY. DTV NPAT however decreased significantly QoQ due to cost expansion arising from the launch of High Definition Services leading to a negative NPAT of Rs. 13 m for Q3 2012.

On a YoY basis NPAT demonstrated a healthy growth to reach Rs. 96 m for the first nine months of 2012 relative to a net loss of Rs. 23 m posted in the corresponding period in 2011. The DTV Pay Television subscriber base increased by over 50,000 subscribers on a YoY basis to surpass 250,000 subscribers as at end Q3 2012.

Dialog Broadband Networks, featuring Dialog’s fixed telecommunications business, continued to consolidate performance trends of the previous quarters, to record its 10th successive quarter of positive EBITDA in Q3 2012.

Aided by the significant expansion in scale and consolidated operating performance following the merger and amalgamation of Suntel Limited, DBN revenue for the nine months ending 30 September 2012 was recorded at Rs. 3.7 b, a significant expansion of 112% YoY. On the back of synergies achieved through the Suntel amalgamation, YTD EBITDA improved by 159% to reach Rs. 1.2 b for the nine months ended 30 September 2012.

Accordingly DBN NPAT for the first nine months of 2012 was recorded at negative Rs. 126 m, a strong 81% improvement compared to the negative NPAT of Rs 658Mn posted in the corresponding period in 2011.

The Group continued to make aggressive investments in consolidating its leadership in terms of nationwide ICT infrastructure footprint, and the application of cutting edge technology across its mobile, fixed and broadband businesses.

Group capital expenditure for the nine months ended 30 September 2012 was recorded at Rs. 10.4 b. Capital expenditure was directed in the main towards strategic investments in high speed mobile broadband and Optical Fibre Network (OFN) expansion projects, further strengthening the Group’s coverage and quality leadership position through the upgrade of its high speed broadband infrastructure.

Notwithstanding the significant 56% YoY growth in Capex, on the back of strong EBITDA performance the Group recorded positive Free Cash Flows (FCF) of Rs. 3.8 b for the first nine months of 2012.

In line with the generation of healthy free cash flows, the Dialog Group continued to maintain a structurally robust balance sheet with the Group’s net debt to EBITDA ratio improving from 0.86x as at end September 2011 to 0.77x as at end of September 2012.