SLT group profit grows 10% to Rs. 2.54 b in 1 H, 2007

Sri Lanka Telecom PLC (SLT) recorded an after tax profit of Rs. 2.5 billion during the first half of 2007. The telecom grant made this profit, after reversing an estimated Rs. 875 million from its revenue considering the tariff reduction, in relation to the settlement of the Supreme Court appeal regarding the tariff revision implemented in 2003.

However, the group profit increased by 10% to Rs. 2.54 billion, compared to Rs. 2.3 billion in the first half of 2006 as Mobitel has turned around and International and Data oriented revenues have improved.

Commenting on the proposed tariff reduction the CEO SLT Shoji Takahashi said, "there will be a short term impact on our revenue and profits from the tariff reduction.

However, we believe that in the competitive environment the reduced tariff will stimulate demand and this will help to mitigate the impact on revenue. The new time based tariff structure will give consumers a benefit, and thus encourage greater usage. SLT has confidence on its revenue growth despite the tariff reduction."

During the first six months the group recorded a revenue of Rs. 20.7 billion, a 6% growth compared to the corresponding period of the previous year.

Due to the provision made against the possible tariff reduction the domestic revenue dropped by 3%.The number of CDMA new connections given during the first half 2007 dropped when compared with the corresponding period in the previous year.

During the first half, 95,000 CDMA new connections were given and the customer base reached around 380,000. A more competitive CDMA new connection charge of Rs. 12,000 (including VAT) was introduced in May 2007. This resulted in an increase in the demand for SLT City Link service.

During the second half, more connections will be given taking advantage of the reduced connection charge and the proposed tariff reduction.

The Consumers' Association of Sri Lanka initiated legal action in the Court of Appeal seeking a writ of Certiorari to quash the approval granted by the Minister of Telecommunications and the Telecommunication Regulatory Commission (TRC) of Sri Lanka for the tariff revision implemented by SLT in September 2003, in which the TRC, the Minister, the Secretary to the Treasury and SLT were cited as the respondents to the case.

SLT's Mobile arm Mobitel showed positive results during this period compared to the first half of 2006. Compared to the net loss of Rs. 3 million in the first half 2006, Mobitel recorded a profit of Rs. 34 million, during the period under review. Revenue has grown by 24% to Rs. 3,074 million compared to the corresponding period last year.

SLT recorded an annualised group EPS of Rs. 2.81, an increase of 10% compared to the previous year.