Dialog rings better 1H results

•  Profitability improves in 1H 2023 driven by cost rescaling initiatives and favourable forex
•  1H 2023 revenue up 20%  to Rs. 97.7 b
•  1H 2023 NPAT up 100% to Rs. 11.8 b 
•  Total taxes paid to Govt. up 29% to Rs. 21.9 b in 1H; include Rs. 6.4 b in direct and Rs. 15.5 b in indirect taxes
•  Makes capex investments of Rs. 14 b; OFCF reach Rs. 6.2 b 

Dialog Axiata Group CEO  Supun Weerasinghe

Dialog Axiata PLC has reported better results in the first half (1H) of the year driven by cost rescaling initiatives and favourable forex regime. 

In a statement Dialog said the Group concluded the 1H 2023 with positive revenue performance being recorded across all business segments, namely, Mobile, Fixed Line, Digital Pay Television, International and Tele-infrastructure to record a consolidated Revenue of Rs. 97.7 billion, demonstrating a growth of 20% Year-to-Date (YTD). 

However, revenue declined of 5% Quarter-on-Quarter (QoQ) to reach Rs. 47.7 billion for Q2 2023 due to drop in non-core revenue (non-core revenue includes international wholesale (hubbing business) revenue and revenue generated from H-One business) resulting from LKR appreciation against the USD. 

Despite the elevated cost base due to unfavourable externalities, Group Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) maintained flattish and marginally declined by 1% YTD to record at Rs. 27.2 billion. 

The EBITDA for Q2 2023 was recorded at Rs. 14.2 billion up 9% QoQ as cost rescaling initiatives gained more traction to record a saving of Rs. 5 billion for the quarter (Rs. 7.5 billion for 1H 2023). Overall, the core business remained resilient to record a core EBITDA margin of 40.2% for 1H 2023.

The Group Net Profit After Tax (NPAT) continued to benefit from forex gains to record at Rs. 11.8 billion for 1H 2023, with a growth exceeding 100% YTD, whilst on a QoQ basis NPAT recorded a decline of 64% to reach Rs. 3.1 billion for Q2 2023. 

The Sri Lanka Rupee (LKR) appreciated against the United States Dollar (USD) by 5.6% during the quarter resulting in a forex gain for the group. Normalised for the forex gain a Net Loss was recorded at Rs.0.5 billion for 1H 2023 and Rs. 0.3 billion for Q2 2023.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs. 21.9 billion to the Government of Sri Lanka (GoSL) during the first six months of 2023, an increase of 29% YTD. Total remittances included Direct Taxes and Levies amounting to Rs. 6.4 billion and Rs. 15.5 billion in Consumption Taxes collected on behalf of the GoSL.

The Group continued to support infrastructure investments in 1H 2023 to ensure seamless customer experience and leadership in Sri Lankas’ Broadband and ICT sectors. Accordingly, the Capital expenditure reached Rs. 14.0 billion for 1H 2023 representing a decline of 38% YTD. 

In line with the above Capex, the Group recorded positive Operating Free Cash Flow (OFCF) of Rs. 6.2 billion for 1H 2023, up over 100% YTD. 

At an entity level, Dialog Axiata PLC (the “Company”) continued to contribute a major share of Group 

Revenue (52%) and Group EBITDA (63%). Company revenue was recorded at Rs. 50.4 billion for 1H 2023 up 3% YTD resulting from the growth in data segment. On a QoQ basis revenue declined 3% QoQ to reach Rs. 24.8 billion due to the impact from consumer affordability challenges. Profitability continued to be impacted YTD due to higher network spend and rise in operating expenses resulting from LKR depreciation against the USD as alluded to earlier. Accordingly, Company EBITDA was recorded at Rs. 17.2 billion for 1H 2023 down 10% albeit improving on a QoQ basis by 7% to reach Rs. 8.8 billion due to traction gained on cost rescaling initiatives. Company NPAT was recorded at Rs. 9.6 billion for 1H 2023 and Rs. 2 billion for Q2 2023. 

Dialog Television (DTV), continued to consolidate its leadership position in the Digital Pay Television 

space with the subscriber base being maintained at 1.7 million as of end 1H 2023. DTV Revenue reached 

Rs. 6.1 billion for 1H 2023 recording a growth of 9% whilst declining 2% QoQ to record at Rs. 3 billion. DTV EBITDA recorded growth of 12% to reach Rs. 1.2 billion for 1H 2023 supported by revenue performance and cost rationalisation. Consequently, DTV NPAT was recorded at Rs. 685 million in 1H 2023 also aided by the strengthening LKR against the USD.

Dialog Broadband Networks (DBN) featuring the Group’s Fixed Telecommunications, Broadband and 

International Businesses continued to record strong revenue growth at 44% YTD to reach Rs. 41.4 billion for 1H 2023 due to growth in wholesale revenue. However, on a QoQ basis revenue declined 5% QoQ to reach Rs. 20.2 billion for Q2 2023 due to lower wholesale revenue amid strengthening exchange rate. Following the revenue performance, DBN EBITDA was up 5% YTD to reach Rs. 7.8 billion for 1H 2023 while NPAT reached Rs. 1.4 billion for 1H 2023 up 13% YTD.

In its 20th annual review, Brand Finance, the world’s foremost independent brand valuation consultancy, bestowed the prestigious title of ‘Sri Lanka’s Most Valuable Brand’ upon Dialog Axiata PLC, for the fifth consecutive year, with a brand value of Rs. 52 billion. Dialog emerged as the strongest brand in Sri Lanka, earning the esteemed AAA+ brand rating. The Company was also accorded the title of ‘Most Valuable Telecommunications Brand’ for the 16th consecutive year.