Corporate Performance Announcement Financial Year - 2005

Corporate Performance Announcement Financial Year - 2005

Dialog Telekom Ltd., (DTL) Sri Lanka’s leading Mobile Telecommunications operator releases Thursday (23 February 2006) an overview of its Financial Performance for the financial year ended 31 December 2005.

Financial Results - 2005

DTL profit after taxation increased by 71 per cent to Rs. 7.01 billion for FY 2005, compared to Rs 4.10 billion in 2004.

DTL comparative results for 2005 and previous financial year are depicted in the table below. The results are based on an audit carried out by the Company’s Auditors, PricewaterhouseCoopers.

Audited Profit & Loss Statement			% Increase
Rs Billion	2004	2005
Revenue	11.41	18.03	58%
Direct Cost	3.93	6.21	58%
Gross Profit	7.47	11.82	58%
EBITDA	5.92	9.42	59%
PAT	4.10	7.01	71%

Table 1: Profit and Loss for 2004 & 2005

Note: Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

The Board of Directors of Dialog Telekom places great emphasis on instituting and maintaining leading edge Corporate Governance practices with respect to the operations of the company. In keeping with the latter paradigm, the company has subjected these financial statements to a statutory Audit.

REVENUE

 

For FY 2005, DTL recorded a revenue of Rs. 18.03 billion, representing a growth of 58 per cent above the Rs. 11.41 billion recorded for FY 2004.

Revenue growth during the preceding year is representative of the company’s consistent Year on Year (YoY) revenue growth trend over the past 5 years fuelled by parallel growth in the key revenue drivers of subscriber base, network reach, increase in usage per customer and expansion in international business.

Revenue growth has been driven by the consistent growth in both pre-paid and post-paid subscriber base. The post-paid active subscriber base increased by 34 per cent from 328,785 to 441,440 between 2004 & 2005. In parallel, the pre-paid active subscriber base increased by 63 per cent from 1,029,856 to 1,682,361. Domestic revenues, which consist mainly of pre-paid and post-paid revenues, accounted for approximately 77 per cent of total revenue in 2005. Post paid revenue contribution amounts to 40% of the total revenue. When compared to results of 2004, pre-paid contribution to total revenue has increased from 35 per cent to 37 per cent.

COSTS

 

Direct Costs

Total direct costs for the period amounted to Rs. 6.21 billion compared to Rs. 3.93 billion in the previous year, which is a 58 per cent increase. Direct costs to revenue ratios for 2004 and 2005 remained constant at 34 per cent.

Significant components of direct cost are Telecom equipment depreciation, Network cost, International Origination cost, Outbound roaming cost, Lease circuit rental costs and International Telecommunication Levy.

Operating Costs

Operating costs comprise mainly of selling and distribution expenses, manpower and general administration costs.

Selling expenses inclusive of sales commission, advertising & promotional expenses was the most significant contributor of operational expenditure (52 per cent)

Manpower cost accounted for 24 per cent of total opex. However, as a proportion to revenue, manpower was maintained at 6 per cent.

Total operating costs for the financial year ended 31 December 2005 was Rs. 4.56 billion amounting to 25 per cent of revenue exhibiting a significant improvement compared to the ratio of 28 per cent recorded for 2004.

International Telecommunication Levy

 

Based on the Finance Act No. 11 of 2004 enacted by the Parliament in late 2004, a levy was imposed on International Telecommunication operators with retrospective effect dating back to March 2003. Accordingly DTL has provided for this levy in full in its financial statements under direct costs. DTL has settled international telecommunication levies in full for FY2005 amounting to Rs. 504 million. The PAT figures for the years ended 31 December 2004 & 2005 are stated after the deduction of this levy. It is envisaged that the Telecommunications Regulator would determine a refund of a part of this levy as compensation for rural network development. Any such refund would be reflected as a cost reversal at a future date and has not been taken in to account at this stage.

OPERATING PROFIT (EBIDTA)

 

The Company has shown substantial growth in earnings before Interest, Tax, Depreciation and Amortisation (EBITDA). EBITDA was recorded at Rs 9.42 billion for 2005 compared to Rs 5.92 billion for 2004 representing a growth of 59 per cent. EBITDA margin is recorded at 52 per cent.

PROFIT AFTER TAX (PAT)

 

Earnings growth is underpinned by revenue growth of 58 per cent combined with enhancements in operational efficiencies as demonstrated by the fact that net profit after tax has displayed a growth of 71 per cent. The net profit margin has also improved to 39 per cent during 2005, from a figure of 36 per cent in 2004.

The Company enjoys a fifteen-year tax holiday expiring at the end of 2012 by virtue of its Flagship Investor status under the aegis of the Board of Investment of Sri Lanka.

Proposed Dividend

The Board of Directors of Dialog Telekom at its meeting held on 23 February 2006, has resolved to propose a first and final Dividend amounting to 40% (payout) of 2005 earnings, which translates to 38 Cents per share and is subject to the approval of the shareholders at the Annual General Meeting (AGM). The AGM and dividend payment dates will be notified in due course.

Investment in Infrastructure

The company view 2006 as an Year of aggressive infrastructure investment, with projected capital expenditure plans totaling to over Rs 15 Billion. The Dialog Telekom Network is expected to grow by over 50% in all dimensions during the course of 2006. In addition to growing its GSM network, Dialog Telekom will invest significant capital in the development of 3rd Generation mobile services, broadband services and fibre optic infrastructure.

Partnerships

• Dialog Telekom became part of world’s largest mobile community after signing up with global telecommunications giant Vodafone which would enhance the company’s capabilities in delivering world-class mobile communication solutions.

• Together with Canada's Research in Motion, Dialog Telekom launched the ultimate in electronic leashes - the Blackberry mobile data and personal information management tool marking another first in Sri Lanka.

• Dialog launched its 100th GPRS Roaming partner network – augmenting its GPRS coverage to 71 Countries and thereby consolidating its position as the leading GPRS roaming service provider in the Asia Pacific Region.

SAP implementation

A successful 'go-live' on the SAP implementation took place as of 01 January '06. This is a benchmark implementation and is at present confirmed to be the largest and fastest SAP implementation in Sri Lanka. The comprehensive SAP implementation at Dialog was completed in a record time of 5 and a 1/2 months. It is envisaged that the SAP implementation will result in a further improvement of the company’s administrative and operating processes.

About Dialog Telekom Limited

Dialog Telekom Limited is the largest mobile operator in Sri Lanka with 2.12 million subscribers as at 31 December 2005 (representing more than 60% market share). It is also the largest listed company on the Colombo Stock Exchange in terms of market capitalisation. With a market capitalisation (as of 31 December 2005) of approximately 127,709 million SLR (USD1.25 billion), representing 21 per cent of the market capitalisation on the Colombo Stock Exchange, the company has the distinction of having become the first company in Sri Lanka to achieve a market capitalization exceeding USD1 billion.

Dialog Telekom Limited is a subsidiary of the Telekom Malaysia Group. In addition to its core mobile telephony business, the company provides international services, supporting an International Gateway infrastructure providing retail and wholesale international voice and data services under the brand name of Dialog Global. The company also provides Internet services through Dialog Internet - a fully-fledged Internet Service Provider (ISP). Dialog Telekom also operates Dialog SAT, a mobile satellite service.

For more information on Dialog, visit www.dialogtelekom.com

About Telekom Malaysia Berhad

Telekom Malaysia Berhad (TM), a leading regional information and communications group, offers a comprehensive range of communication services and solutions in fixed-line, mobile, data and broadband. As one of the largest listed companies on Bursa Malaysia with an operating revenue of more than RM13 billion, TM is driven to deliver value to its stakeholders in a highly competitive environment.

The Group places emphasis on continuing customer service quality enhancements and innovations. Currently, with investments and operations in 12 countries around Asia and globally, TM is focused on sustainable growth in both the local and international markets.

For further information on TM, visit www.tm.com.my