Dialog revenue grows 18% in first three months

• Posts Rs. 2.1 b non-cash forex loss from rupee devaluation

Dialog Axiata PLC yesterday announced its consolidated financial results for the three months ending in March.

Financial results included those of Dialog Axiata PLC and of the Dialog Axiata Group post-consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd. (DBN) and Dialog Television (Pvt) Ltd. (DTV).

The acquisition of 100% of the shares in Suntel Limited by DBN was completed on 21 March 2012. Accordingly, the assets and liabilities of Suntel have been reflected in the consolidated balance sheet of the Group.

The Dialog Group recorded strong growth in revenue during the 1st Quarter to register Rs. 12.9 b, a significant increase of 8% relative to Q4 2011 and 18% relative to Q1 2011.

Growth in group revenue was driven by healthy growth in segmental revenues pertaining to the mobile, international, digital pay television and tele-infrastructure businesses of the Group.

Dialog Group EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) was recorded at Rs. 4.5 b in Q1 2012, up 27% YoY. EBITDA performance however exhibited a contraction of 4% on immediate QoQ basis, on the backdrop of significant inflation with respect to energy related costs and foreign currency denominated inputs.

In addition to the aforementioned input cost dynamics, the QoQ comparison is further impacted by the recognition of Rs. 311 m Telecommunication Development Fund (TDF) refund in the previous quarter.

Downstream of robust performance with respect to Revenue and EBITDA, the depreciation of the rupee relative to the dollar by 12.4% QoQ, resulted in the provisioning of a non-cash translational Foreign Exchange loss of Rs. 2.1 b, leading to the Dialog Group recording a net loss of Rs. 531 m for Q1 2012.

The Group’s PAT performance also reflects the absorption of acquisition expenses amounting to Rs. 343 m with respect to the acquisition of Suntel Limited by DBN. Group PAT normalised for the exceptional (non-cash) foreign exchange loss and the one-off acquisition expenses, is recorded at Rs. 1.9 b – an increase of 14% QoQ and 85% YoY.

At an entity level, the Company continued to contribute a major share (91%) of Group Revenue and (92%) of Group EBITDA. The Company continued to leverage its market leading position within Sri Lanka’s mobile sector featuring a subscriber base of 7.4 m, to deliver strong growth in revenue.

The Company recorded revenue of Rs. 11.8 b in Q1 2012, up 8% relative to Q4 2011 and 19% relative to Q1 2011. The Company continued to deliver a healthy momentum in EBITDA, recording growth of 27% relative to Q1 2011 at a margin of 35%.

Company EBITDA, however, contracted by 4% relative to Q4 2011 on the backdrop of significant inflation with respect to energy related costs and foreign currency denominated inputs, and as alluded to previously, the recognition of a TDF refund of Rs. 311 m in the previous quarter. Company EBITDA normalised for the impact of the one-off TDF refund in the previous quarter, registered growth of 4% on a QoQ basis.

Notwithstanding healthy momentum with respect to Revenues and Operating Profitability (EBITDA) and operating margins, Company PAT was severely impacted by non-cash translational Foreign Exchange Losses amounting to Rs. 2.1 b as alluded to previously. Accordingly, the Company recorded a net loss of Rs. 407 m in Q1 2012. Company PAT normalised for the aforementioned exceptional items grew 5% relative to Q4 2011 and 61% relative to Q1 2011.

DTV continued its positive growth trajectory with revenue recorded at Rs. 677 m for Q1 2012, registering growth of 22% relative to Q1 2011. EBITDA for Q1 2012 was posted at Rs. 181 m, an increase of 38% relative to Q1 2011.

DTV EBITDA however exhibited contraction of 8% on a QoQ comparison, due to significant inflation with respect to energy costs and foreign exchange denominated inputs such as television channel content and satellite transponder costs.

Downstream of healthy EBITDA performance, DTV recorded positive PAT for the second consecutive quarter. DTV PAT for Q1 2012 was recorded at Rs. 37 m.

DBN, featuring Dialog’s fixed telecommunications business continued to consolidate its performance with revenue for Q1 2012 recorded at Rs. 609 m, registering a 4% growth relative to Q1 2011.

DBN EBITDA was recorded at Rs. 180 m in Q1 2012, an increase of 26% relative to Q1 2011. DBN EBITDA however exhibited contraction of 14% on a QoQ comparison, due to significant inflation with respect to energy costs and network operating inputs.

Downstream of healthy EBITDA performance, DBN recorded a negative PAT of Rs. 147 m in Q1 2012, an improvement of 25% relative to Q1 2011.