Dialog Telekom continues to deliver robust performance

Dialog Telekom PLC core mobile business continued to deliver robust performance in the market for the three months ended March 31, 2008 with a subscriber base of 4.5 million, representing 35% growth Year on Year (YoY) and an estimated market share of 53 per cent.

Revenue growth during the same period was, however, relatively modest at 8% on the backdrop of a substantial downward revision in tariffs in December 2007. The tariff revision was one of several initiatives carried out during 2007 aimed at expanding the mobile market through affordability enhancement in contra-direction to macro inflation.

Sri Lanka's mobile telephony penetration level reached an estimated 40% at the end of the first quarter substantially ahead of neighbouring countries in tandem with tariff levels in the market being amongst the most affordable in the region.

While the company recorded a substantial growth in airtime usage in response to affordability enhancement, elasticity levels (airtime usage increase in response to price change) achieved, have been inadequate to deliver a recovery of revenue growth trajectories during the first quarter post tariff reduction.

Downstream of revenue performance, cost expansion driven in the main by general inflation (23.8% YoY), energy derived costs (42% YoY), and expansion of the company's network infrastructure, with associated increases in Network related costs (52% YoY) and Depreciation (60% YoY) has resulted in negative growth of 24% at EBITDA level and a reduction in PAT by 47% on a YoY basis.

The conversion of Dialog Telekom's robust position in terms of mobile market performance (subscriber additions, value added services and network reach) in to Revenue, EBITDA and PAT growth will continue to be challenging on the backdrop of general inflation, cost of funds and enhanced market penetration levels.

However, notwithstanding medium term perturbations in the macro economic environment, Dialog has continued its aggressive investment thrust towards building infrastructure and service delivery capacity to extend its entrenched leadership in the provision of a broad range of telecommunications services.