Impressive growth in SLT profits despite revenue reversal

Sri Lanka Telecom (SLT) reported a group after tax net profit of Rs. 4.3 billion during the first three quarters of 2007, a 12% increase year on year basis.

The group revenue increased by 7% during the first nine months of 2007, compared to the corresponding period of the previous year. The corresponding increase in the company was 5%.

Additional Revenue generated by the CDMA new connections given, have been absorbed by the revenue reversal made in accordance with the Supreme Court judgment given on the legal action initiated by the "Consumers Association of Sri Lanka".

Hence the increase of domestic revenue was marginal. The company expects a growth in usage in the future due to the effect of price elasticity. By the end of September 2007 SLT had a fixed line subscriber base of 1.3 million.

During the first nine months of the year, 161,550 new CDMA connections were given.

This is lower than the connections given during the corresponding period of the previous year by 3,492 connections. In May 2007 the connection charge was reduced to Rs. 12,000 from Rs. 16,000.

Revenues through international gateway operations continued to increase. The increase in international incoming traffic volumes mainly through VOIP operations contributed to the increase. The competitive nature of the local market has shown a slight drop in IDD call revenue.

Data related revenues have shown a healthy growth. This includes the broadband and narrowband products. By September 2007, SLT had about 45,000 ADSL connections and 82,000 post paid internet customers.

Additionally, SLT provides domestic and international leased services and IPVPN facilities to corporate customers.

SLTL's wholly owned subsidiary and mobile operator Mobitel (Pvt) Ltd., recorded a strong growth in the first nine months of operations in 2007. The subscriber base increased over 60% to 1.11 million in September 2007 compared to the corresponding period of last year.