Mobitel first Quarter Profit exceeds Rs. 200 m

The heightened competition with the entry of the fifth mobile operator during first quarter of 2009 saw an escalating price war that eroded margins of all existing mobile operators and a pattern of customer switching between operators. Mobitel too was not insulated from the industry developments and was forced to adjust to the market realities.

It is commendable that despite the shrunk margins and increase in subscriber acquisition costs in the face of intense competition, Mobitel has returned a commendable performance reporting healthy improvements in all performance indicators including Subscriber base, revenue, EBITDA, EBIT and NPAT during the first quarter of 2010.

For the first quarter of 2010 Mobitel reported an After Tax Profit of Rs.204 million as against Rs.113 million losses in the fourth quarter of 2009, recording a 280% improvement.

The reported profit for the corresponding quarter of 2009 was Rs.250 million, but during that quarter the company enjoyed an exemption from corporate tax. The profit of Rs.204 million for the first quarter of 2010 has been reported after providing Rs.98 million against taxes.

The profit growth in the 2010 first quarter is a result of an impressive growth in revenue of the company since mid 2009.

In absolute terms Mobitel recorded a sales turnover of Rs.4.6 billion in the first quarter of 2010 compared to Rs.3.6 billion in the corresponding quarter of 2009, an increase of Rs.1 billion.

This significant feat was possible due to a growth in the subscriber base by 766,000 since the first quarter of year 2009, despite the stepped up intensity in competition in the mobile telephony sector.

By the end of the first quarter of 2010 Mobitel reported a subscriber base of 3.58 million. It is creditable that the 2010 first quarter profit was achieved after incurring an incremental depreciation charge of Rs.353 million, 51% higher when compared to the first quarter 2009.

Higher depreciation are attributed to the new investments in technology supporting high speed broadband and network expansion during the second and third quarters of 2009.

Commenting on the latest quarterly results of the company, Mobitel Chairperson, Mrs Leisha De Silva Chandrasena said, "We are proud to announce our latest quarterly financial results which show that our efforts notwithstanding the challenges faced by the industry in the year 2009 have paid off. During a trying past year in which most others chose to defer investing in new capacity, we invested in building our network and in our customers''.

"Having so done, we are well placed to harness the full potential of our investments of the past and now capitalise on the new market opportunities that are unfolding. We are pleased to have recovered from challenges we faced during the year 2009, save the first quarter of that year, and are confident of a performance that our stakeholders can be proud of in the current financial year".