Dialog Telekom records Rs. 7.55 b profit after tax in nine months

Dialog Telekom Ltd, post consolidation with subsidiary performance, recorded a Profit after Tax (PAT) of Rs. 7.55 billion for the nine months ended September 30, 2006. Dialog Telekom and its subsidiaries (Dialog Broadband Networks (Pvt) Ltd and Asset Media (Pvt) Ltd) will hereinafter be referred to collectively, as "the Group".

DTL (hereinafter referred to as "the Company") recorded a PAT of Rs. 7.46 billion, up 45 per cent relative to the corresponding period in 2005.

The period ending September 30, 2006 featured significant downward revision of tariffs (in excess of 30 per cent) thereby enhancing the affordability of the company's telecommunications services to its 2.8 million strong subscriber base spread across all provinces of the country. The reduction in tariffs was accompanied by aggressive expansion of coverage in rural areas of the country fuelled by the launching of the company's USD 150 million (Rs 15 billion) investment project billed by the BOI as one of the single largest infrastructure investments in 2006.

Total operating revenue increased 44 percent to Rs. 18.50 billion, driven mainly by higher call revenues accruing from a larger subscriber base. The prepaid segment contributed a major part of the growth. Other factors driving revenue growth include the growth in coverage and increased international traffic and associated revenues.

Domestic revenues, which consist mainly of pre-paid and post-paid revenue, accounted for approximately 79 per cent of the Company Revenue for the nine months ended September 30, 2006.

The major components of total (company) revenue are pre-paid revenue (42 per cent), post-paid revenue (37 per cent) and inbound roaming revenue (4 per cent). When compared with results for the period ended September 30, 2005, the contribution from the pre-paid segment has increased from 36 per cent to 42 per cent.

The Company's cellular subscriber base increased by 47 per cent to 2.84 million subscribers. The prepaid segment increased by 57 per cent from 1.51 million to 2.36 million. In parallel, the postpaid subscriber base increased by 13 percent from 0.42 to 0.48 million.

The downward revision of tariff on July 7 served to enhance the value delivered to Dialog customers. Tariff reductions also served as a catalyst for the achievement of a significant boost in net additions as well as in Minutes of Use (MoU). Postpaid MoU registered an increase of 5 per cent relative to the quarter ended June 30, 2006.

Average Postpaid ARPU (Average Revenue per User per month) for the nine months ended September 30, 2006 was up 6 per cent to Rs. 1,698 per month compared to the corresponding period in 2005. The Company's operating costs recorded at Rs. 4.37 billion grew by 34 per cent relative to those applicable to the nine months ended September 30, 2005. The growth rate of 34 per cent is however significantly lower than the 44 per cent growth rate registered by Operating Revenues.

Operating costs comprise mainly of selling and distribution expenses, manpower and general administration costs.

Selling expenses inclusive of sales commission, advertising and promotional expenses were the most significant contributor to operational expenditure (53 per cent).

Operating expenses as a percentage of operating revenue improved to 24 per cent relative to the 25 per cent recorded during the first nine months of 2005.

The improvement in cost efficiency is attributed to relative cost reductions with respect to maintenance and selling expenses.

EBITDA was recorded at Rs. 10.06 billion for the nine months ended September 30, 2006 compared to Rs. 6.85 billion for the period ended September 30, 2005 representing a growth of 43 per cent. The EBITDA margin was maintained at 53 per cent, the same level recorded for the period ended September 30, 2005.