Thursday, 19 February 2015 00:38
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Struck by Interim Budget moves mobile telecom giant Dialog spells out its Rs. 24.4 b contribution
Rs. 11 b in direct taxes, fees and levies; Nets Rs. 13.3 b in consumption tax on behalf of Govt.
Group made capex of Rs. 15.2 b in FY2014
Struck by proposals under the Interim Budget of the new Government and perhaps ringing a loud bell, mobile telecom giant Dialog Axiata yesterday revealed a staggering Rs. 24.4 billion direct and indirect contribution to Treasury coffers as well as rolling out Rs. 15.2 billion in capital expenditure in 2014.
A slew of measures in the 29 January Interim Budget specifically targeted the telecom sector and being the industry leader Dialog was the hardest hit. In releasing its full year financials for 2014, Dialog also made it a point to place on the table its contribution to Government revenue collection. This, according to analysts, was a message to the new Government that it was being unfair to burden a socially and economically responsible and important industry such as mobile telecom.
Govt. killing...
Dialog said the group contributed Rs. 11.1 billion in taxes, fees and levies to the Government during the financial year ended 31 December 2014, inclusive of income tax on the basis of 2% of company revenue. Furthermore, the group additionally collected consumption taxes, totalling Rs. 13.3 billion on behalf of the Government during FY 2014, comprising in the main of Telecom Levy collections amounting to Rs. 10.5 billion. Accordingly, remittances to the Government accruing from the operations of the group totalled Rs. 24.4 billion, Dialog said.
It also said that the group’s capital expenditure for FY 2014 amounted to Rs. 15.2 billion. “Capital expenditure was directed in the main towards investments in 2G, 3G and 4G networks, Optical Fibre Network (OFN) expansion projects and the Bay of Bengal Gateway (BBG) Sub-Marine Cable project to further strengthen the group’s leadership in Sri Lanka’s ICT sector,” Dialog said in the statement detailing its financial results.
Sirisena- Wickremesinghe Government’s Interim Budget, presented in Parliament by Finance Minister Ravi Karunanayake, imposed a one-off levy of Rs. 250 m on all licensed mobile telephone operators in Sri Lanka to generate Rs. 1,250 million and desist mobile facility operators from passing the tax of 25% payable on reload to customers; the company to bear the tax.
Additionally, a one-off levy of Rs. 1,000 m on companies engaged in commercial operations of the Direct-to-Home via satellite operators having more than 50,000 subscribers in Sri Lanka was imposed to generate Rs. 2,000 million as well as a one-off levy of Rs. 1,000 million on satellite owners who utilise the location reserved for Sri Lankan satellite to generate Rs. 1,000 million. These measures were in addition to the 25% super gain tax on corporate Groups achieving a taxable profit of Rs. 2 billion and above in the 2013/14 financial year.
The upcoming impact apart, for FY2014, Dialog yesterday reported record consolidated revenue of Rs. 67.3 billion for the Financial Year 2014 and Rs. 17.3 billion for Q4 2014 respectively, representing an increase of 6% Year-on-Year and 2% Quarter-on-Quarter. Group Net Profit After Tax for FY 2014 grew by 17% YoY to be recorded at Rs. 6.1 billion. On a QoQ comparison however, Group NPAT (Net Profit After Tax) for Q4 2014 contracted by 13% QoQ due to the recognition of non-cash translational foreign exchange losses amounting to Rs. 290 million in Q4 2014 following the depreciation of the SLR relative to the USD by 1.1% QoQ.
Dialog said the consolidated financial results for the year ended 31 December 2014 excludes any and all impact from the Interim Budget 2015. The Interim Budget was presented by the Government on 29 January 2015 and was passed by Parliament on 07 February 2015.
“The Government is in the process of enacting legislation corresponding to the budget proposals which will bring the said proposals into force and also provide definitive clarity with respect to applicability and implementation parameters. Accordingly, and pending legislation and clarity as at the time of announcement, the consolidated financial results as reported excludes any and all impacts from the Interim Budget,” Dialog said.
