Axiata of Malaysia-controlled Dialog Group of Sri Lanka recently posted its financials for the second quarter of 2010, in which it indicated a significant turnaround compared to the same period of the last financial year.
Featuring mobile, broadband and fixed line CDMA, and pay television businesses; the group recorded revenues of Rs. 20.11 billion for the first six months of 2010, up 15% from the same period last year.
Also indicated was a Net Profit after Tax (NPAT) figure of Rs. 1.37 billion in the second quarter of 2010; which means the total amount for both quarters of this year was Rs. 2.08 billion, equaling a year-on-year increase of 122%.
Driven almost entirely by mobile unit Dialog Axiata, this turnaround was due to significant improvements in this business’s key indicators, according to a group statement, including revenue growth, a "robust 15% compared to [1st half] of 2009 and by 2% (quarter-on-quarter)", and growth in subscriber base of 10% from last year, to 6.6 million subscribers in June 2010. The result being a second quarter and 1st half 2010 profit of Rs. 1.81 billion and Rs. 3.09 billion respectively, up 137% from last year's 1st half.
The statement also indicated that the turnaround was a result of “consistent focus on strategic cost re-scaling initiatives implemented over the past quarters, supplemented by multiple revenue enhancement strategies continued to deliver traction, with (quarter-on-quarter) improvements in Group (Earnings before Interest, Tax, Depreciation and Amortisation), and NPAT - of 15% and 95% respectively". Additionally, it was further noted that the first half of 2010 "also witnessed realisation of significant cost savings accruing from network modernisation carried out in 2009, in terms of Annual Maintenance Charges of telecommunications equipment and electricity charges". A 2009 modernisation carried out at a cost of Rs. 6 billion. Also indicated was that, during the first half of 2010, “foreign exchange translation gains” of Rs. 279 million were made compared to exchange losses of Rs. 136 million over the same period in 2009.
Additionally, "(following) on the network modernisation focus in 2009, spending on capital items reduced by 46% (year-on-year) to total Rs. 2.830 (million)", while combined "strong operating cash flows and a prudent and strategic approach to capital expenditure, lead to the generation of positive free cash flows of Rs. 4.32 (billion in the first half of 2010), a near four-fold increase relative to the negative free cash flow of Rs. 1.32 (billion in the first half of 2009).” Performance improvements were also noted in fixed line CDMA, broadband and television businesses, with Dialog Broadband Networks recording positive earnings following seven negative quarters. This due to "operating and direct cost savings accruing from continued focus on the implementation of strategic cost rescaling initiatives".
The company's revenue was Rs. 577 million, partly due to broadband revenues growth of 26% fuelled by a 17% year-on-year growth in fixed broadband subscribers. Meanwhile, the company's fixed line CDMA subscriber base increased by 3% year-on-year and 2% quarter-on-quarter to reach ultimately reach its current 182,000 customers. It was also noted that "CDMA usages revenues however decreased by 10% (year-on-year)".
Meanwhile, Dialog TV recorded revenues of Rs. 522 million in the second quarter of 2010, up 7% from the last quarter and 27% compared to the second quarter of 2009". Additionally, subscribers increased to a total of 160,000, an increase of 17% compared to the second quarter of 2009. The company also reported earnings for the second successive quarter fuelled by increase in usage revenues.