New promotions involving price cuts and increasing competition will drastically affect profits of the next few quarters at Dialog Telekom, Sri Lanka's biggest mobile phone company, which posted some alarming results for the first half this year, according to industry analysts.

"The recent lifetime discount promotion by the company and the Dialog Broadband offer will both impact Dialog's bottom-line drastically during the next two quarters," a stock market analyst said.
The first half 2008 net profit of Dialog Telekom, fell sharply by 66 percent to Rs 1.6 billion against the same period in 2007, staggering the Colombo bourse. The second quarter 2008 results were also bad with net profit down 78 percent year on year to Rs 538 million.

"The loss making entities such as Dialog TV and Dialog Broadband absorbed most profits in the company during the first half in 2008," Thakshila Hulangamuwa, Manager Business Development Asha Phillips Securities, said. He said the company is yet to face the competition by Airtel which is planning to launch somewhere in November. "Also the competition from existing mobile phone players will attribute to the company losing market share and profitability," he said. Analysts said that the recent promotions by Dialog may be due to the company needing ready cash. "The initial cash will come in and it is expected to be substantial," Mr. Hulangamuwa said.

"What the company is trying to do through these promotions is also to retain their customer base ahead of tough competition by Airtel," he added.