SLT Chief Executive Officer Janaka R. Abeysinghe

Former SLT Chairman Rohan Fernando

Sri Lanka Telecom has suffered a net loss of Rs. 2.1 billion at Group level in the second quarter of FY23 as against a profit of Rs. 1.96 billion a year ago.

At Company level the loss was Rs. 1 billion in comparison to a profit of Rs. 4.2 billion in 2Q of FY22.

For the first half, Group loss was Rs. 1.16 billion as against a profit of Rs. 4.6 billion. At Company level the loss was Rs. 401 million in comparison to a profit of Rs. 8.3 billion.

In a statement SLT said the 2Q loss was due to cost escalations and impairment of Long-Term Evolution (LTE) assets. SLT PLC staff costs account for 36.8% of Operating Costs.

The statement said while SLT PLC had 2.4% (Rs.400 million) revenue growth, Mobitel recorded 9.3% (Rs.1,066  million) de-growth during Q2 of FY23 compared to Q2 of FY22. Group revenue, therefore, decreased by 2.8% (Rs.763 million) from Q2’22 to Q2 of FY23. SLT PLC revenue increase was driven by growth in Broadband, IPTV, and Enterprise revenue streams. However, such increase was slowed down due to decrease in International Transit revenue (90.3%, Rs. 614 million) during Q2 of FY23, though it must be noted that such international transit revenue has virtually no margin.  SLT PLC revenue growth was primarily hindered due to delay in monetisation of fibre network and customer churn. Revenue de-growth in Mobitel was due to significant decline in subscriber base. Subscriber base contracted by 1 million from June 2022 to June 2023.

Group Opex increased by 15.1% (Rs. 2,513 million) in Q2 of FY23 compared to corresponding quarter in previous year. Even though Mobitel revenue has declined YoY, Opex increased by 30.4% (Rs. 1,998 million) during Q2 of FY23 due mainly to sales related commissions. SLT PLC Opex increased by 5.5% (Rs. 619 million) owing to AMC/license cost driven by devaluation of the rupee, electricity tariff and fuel price increases.

Group EBITDA dropped by 31.9% (Rs. 3,276 million) during Q2 of FY23 due to decrease in Mobitel EBITDA by 61.9% (Rs. 3,064 million). Accordingly, Group Operating Profit, PBT and PAT were also decreased by 92.7% (Rs. 3,121 million), 161.3% (Rs. 6,039 million) and 208.0% (Rs. 4,076 million) respectively. Mobitel recorded Rs. 835 million Operating Loss due to lower revenue and higher Operating Costs, ending with a net loss of Rs. 1,390 million for the quarter.

SLT Group’s revenue growth was stagnant for the 1st half of 2023 to record Rs. 52.7 million, a 0.4% degrowth compared to the same period last year. At a company level, SLT revenues grew by 6.4% to Rs. 34.6 billion for the 1st half of 2023.

During the first half of 2023, Mobitel revenue contracted by Rs. 2.2 billion compared to revenue for the same period in 2022 and the loss recorded for the period was Rs. 1.5 billion. However, with the recent changes in management, Mobitel has been able to arrest the decline in subscriber base and revenue.

SLT Chief Executive Officer Janaka R. Abeysinghe said: “Prolonged recovery from the effects of the economic downturn, loss of Mobitel subscriber base, low productivity, and delay in monetisation of fiber network have had a significant impact on the revenue generation of the Group.” 

“The Government’s macroeconomic adjustments will help the country’s economic revival in the long term but may initially affect business growth and the disposable income levels of our customers.  Managing the escalating operational costs, resulting from fluctuations in exchange rates and inflationary conditions etc. is a huge concern.  In this context, pricing is key but setting the right price has become increasingly challenging.  This situation will add pressure to our revenue generation and top line performance. Under these conditions, the Mobitel turnaround has become an immediate concern,” Abeysinghe said.  

He also said bank lending rates remaining high in the recent past has caused margins to erode and made funding extremely difficult.  

“However, with the positive changes adopted by the Central Bank recently, we believe the lending rates will decline. We will continue to forge ahead, with increased productivity and navigate through the current economic uncertainties.  Our commitment to providing innovative solutions and exceptional customer service will remain unwavering,” the CEO added.    

SLT Group 2nd Quarter 2023 results have been reviewed by the Auditors, Ernst and Young in accordance with LKAS 34, “Interim Financial Reporting”.

SLT sets record straight over changes in Board and related media coverage