Dialog Consolidates Performance with Strong 3rd Quarter

Dialog Axiata PLC announced, Wednesday 31st October 2012, its consolidated financial results for the nine months ended 30th September 2012. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”) post-consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd (“DBN”), and Dialog Television (Pvt) Ltd (“DTV”).

The Group recorded strong revenue growth across Mobile, International, Digital Pay Television, Tele-infrastructure and Fixed line businesses to record a consolidated revenue of Rs 41.5Bn for the nine months ending 30th September 2012, demonstrating a significant growth of 24% YoY. Group Revenue for Q3 2012 was recorded at Rs 14.5Bn, reflecting growth of 3% QoQ.

Group EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) for the 1st nine months of 2012 was recorded at Rs 14.2Bn, a significant increase of 21% relative to the corresponding period in 2011. Group EBITDA Margin for the nine months ended 30th September 2012 declined marginally by 1 percentage point on a YoY basis to 34%. Group EBITDA for Q3 2012 was recorded at Rs 4.9Bn up 5% QoQ. The Group EBITDA margin improved by 1 percentage point QoQ to reach 34%.

Non-Operational performance below EBITDA for the 1st nine months is characterised by noncash translational foreign exchange losses amounting to Rs 2.5Bn, and a one-off write back of the company’s deferred tax provision of positive Rs 2.3Bn. While non-Cash foreign exchange losses accrued due to the devaluation of the SLR by 13.9% YTD, the deferred tax write back was effected subsequent to the company opting for a 2% post-tax holiday revenue tax with effect from 2013, in line with the terms of its Flagship Investor Agreement with the Board of Investment of Sri Lanka. Group NPAT (Net Profit After Tax) for the nine months ended 30th September 2012 was accordingly recorded at Rs 5.1Bn a significant improvement of 43% YoY. Group NPAT improved significantly on a QoQ basis with Q3 2012 NPAT posted at Rs 4.7Bn compared to NPAT of Rs 879Mn in Q2 2012. NPAT growth QoQ is underpinned by the one-off deferred tax write back of Rs 2.3Bn and a non-cash foreign exchange gain of Rs 447Mn in the 3rd Quarter, in contrast with a total of Rs 2.9Bn in non cash foreign exchange losses recorded in the previous two quarters.

Group NPAT post normalisation for exceptional gains/charges (consisting of the non-cash foreign exchange loss of Rs 2.5Bn, deferred taxation reversal of Rs2.3Bn and costs related to the Suntel acquisition amounting to Rs 343Mn), is recorded at Rs 2.0Bn for Q3 2012 and Rs 5.6Bn for the nine months ended September 2012 demonstrating a significant growth in normalized NPAT performance of 16% QoQ and 76% YoY.

Dialog Axiata PLC (“the Company”) featuring the Mobile, International and Tele-Infrastructure segments of the Group portfolio continued to contribute a major share of Group Revenue (87%) and of Group EBITDA (88%). Company revenues grew by 19% compared to the 1st nine months of 2011 and 3% relative to Q2 2012. The Company’s revenue trajectory was driven by the growth in usage and the continued increase in its mobile subscriber base which was recorded at 7.6 Million as at the end of Q3 2012.

On the backdrop of robust performance in Revenue, Company EBITDA grew by 15% YoY to be recorded at Rs 12.5Bn for the 1st nine months of the year. Company EBITDA for Q3 2012 was recorded at Rs 4.3Bn an increase of 6% relative to Q2 2012. On the backdrop of strong EBITDA performance, Company NPAT grew by 21% YoY to be recorded at Rs 5.2Bn inclusive of the impact of the deferred tax reversal of positive Rs 2.3Bn and non-cash forex translational loss of negative Rs 2.5Bn. Company NPAT normalized for the exceptional items was recorded at Rs 5.7Bn for the nine months ended 30th September 2012 an increase of 45% relative to the 1st nine months of 2011.

Dialog Television (DTV) continued its positive growth momentum recording revenue growth of 29% YoY to reach Rs 2.2Bn for the 1st nine months of 2012. On the backdrop of aggressive revenue growth, YTD EBITDA was posted at Rs 498Mn, a 32% increase YoY. DTV NPAT however decreased significantly QoQ due to cost expansion arising from the launch of High Definition Services leading to a negative NPAT of Rs 13Mn for Q3 2012. On a YoY basis NPAT demonstrated a healthy growth to reach Rs 96Mn for the 1st nine months of 2012 relative to a Net Loss of Rs 23Mn posted in the corresponding period in 2011. The DTV Pay Television subscriber base increased by over 50,000 subscribers on a YoY basis to surpass 250,000 subscribers as at end Q3 2012.

Dialog Broadband Networks, featuring Dialog’s fixed telecommunications business continued to consolidate performance trends of the previous quarters, to record its tenth successive quarter of positive EBITDA in Q3 2012. Aided by the significant expansion in scale and consolidated operating performance following the merger and amalgamation of Suntel Limited, DBN Revenue for the nine months ending 30th September 2012 was recorded at Rs 3.7Bn, a significant expansion of 112% YoY. On the back of synergies achieved through the Suntel amalgamation YTD EBITDA improved by 159% to reach Rs 1.2Bn for the nine months ended 30th September 2012. Accordingly DBN NPAT for the 1st nine months of 2012 was recorded at negative Rs 126Mn a strong 81% improvement compared to the negative NPAT of Rs 658Mn posted in the corresponding period in 2011.

The Group continued to make aggressive investments in consolidating its leadership in terms of nationwide ICT infrastructure footprint, and the application of cutting edge technology across its mobile, fixed and broadband businesses. Group Capital expenditure for the nine months ended 30th September 2012 was recorded at Rs 10.4Bn. Capital expenditure was directed in the main towards strategic investments in High Speed Mobile Broadband and Optical Fibre Network (OFN) expansion projects, further strengthening the Group’s coverage and quality leadership position through the upgrade of its high speed broadband infrastructure.

Notwithstanding the significant 56% YoY growth in Capex, on the back of strong EBITDA performance the Group recorded positive Free Cash Flows (FCF) of Rs 3.8Bn for the 1st Nine months of 2012. In line with the generation of healthy free cash flows, the Dialog Group continued to maintain a structurally robust balance sheet with the Group’s Net Debt to EBITDA ratio improving from 0.86x as at end September 2011 to 0.77x as at end of September 2012.