Dialog Consolidates Performance with Strong 1st Quarter Results

Dialog Axiata PLC announced, Tuesday 14th May 2019, its consolidated financial results for the three months ended 31st March 2019. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

The Group continued its growth momentum across all key business segments, namely, Mobile, International, Tele-infrastructure, Digital Pay Television and Fixed Line to record a consolidated revenue of Rs29.0Bn for Q1 2019, demonstrating a growth of 2% Quarter-on-Quarter (“QoQ”) and 11% Year-on- Year (“YoY”). Underpinned by strong revenue growth and cost optimisation, Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) grew 5% QoQ and 17% YoY to record at Rs12.0Bn for Q1 2019.

Dialog Group adopted SLFRS 16, ‘Leases’, with effect from 1 January 2019. The adoption of the standard resulted in an EBITDA upliftment of Rs639Mn for Q1 2019 which is a 2.2pp increase in the EBITDA margin. The impact on Net Profit was not material. Normalised for the positive impact from SLFRS 16, the EBITDA margin was recorded at 39.4% for Q1 2019.

The Group Net Profit After Tax (“NPAT”) recorded significant growth QoQ to reach Rs4.9Bn for Q1 2019 against Rs0.1Bn recorded in Q4 2018, benefiting from strong EBITDA performance and non-cash translational forex gains. On a YoY basis the NPAT growth was recorded at 72%. The Sri Lankan Rupee (“LKR”) appreciated against the United States Dollar (“USD”) by 3.6% in Q1 2019 vs. a depreciation of 1.5% and 8.2% in Q1 2018 and Q4 2018 respectively. Normalised for non-cash translational forex losses/gains NPAT was recorded at Rs3.6Bn, up 54% QoQ and 11% YoY.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs9.4Bn to the Government of Sri Lanka (“GoSL”) during Q1 2019. Total remittances included Direct Taxes and Levies amounting to Rs3.6Bn as well as Rs5.8Bn in Consumption Taxes collected on behalf of the GoSL.

The Group capital expenditure for Q1 2019 totalled to Rs2.6Bn representing a capex to revenue ratio of 9%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Group Operating Free Cash Flow (“OFCF”) was recorded at Rs7.9Bn for Q1 2019. The Group continued to exhibit a low geared balance sheet with the Net Debt to EBITDA ratio being maintained at 0.82x as at end of March 2019.

For the first time in South Asia, Dialog successfully demonstrated a fully standards based 5G mobile service, integrating 5G network infrastructure with the world’s fastest foldable 5G device. This demonstration marks yet another instance of the Dialog Group’s efforts in spearheading the country’s transformation into a regional technology hub, leveraging on the unique capabilities of the 5G technology.

At an entity level, Dialog Axiata PLC (“the Company”) continued to contribute a major share of Group Revenue (72%) and Group EBITDA (78%). The Company further consolidated its market leadership position in the Sri Lankan mobile space to surpass 14.3Mn subscribers during the quarter. Company Revenue for Q1 2019 declined by 2% QoQ albeit growing 1% YoY to reach Rs20.8Bn. The subdued revenue performance was due to transfer of Wholesale Business to DBN. Underpinned by cost optimisations, Company EBITDA for Q1 2019 was recorded at Rs9.3Bn, an increase of 62% QoQ and 22% YoY. As alluded to earlier, the adoption of SLFRS 16 had a positive impact on the Q1 performance of the Company resulting in an EBITDA upliftment of Rs600Mn. Company NPAT was recorded at Rs4.8Bn for Q1 2019 growing 283% QoQ and 91% YoY due to strong EBITDA performance and non-cash translational forex gains.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with a subscriber growth of 16% YoY to reach 1.2Mn as at end of December 2019. DTV Revenue grew 9% QoQ and 12% YoY amid growing subscription revenue. DTV EBITDA was recorded at Rs474Mn for Q1 2019 declining 15% YoY due to increase in channel and transponder costs. Accordingly, DTV’s reported Net Loss increased to Rs166Mn for Q1 2019 relative to a Net Loss of Rs126Mn for Q1 2018.

Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications and Broadband Business recorded revenue of Rs6.7Bn for Q1 2019, representing an increase of 22% QoQ and 83% YoY. Strong top line improvement mainly resulted from the transfer of wholesale business. On the back of strong revenue performance, DBN EBITDA grew 8% YoY to record Rs2.4Bn in Q1 2019. DBN NPAT however declined 20% YoY to reach Rs483Mn due to increased depreciation stemming from Fixed 4G LTE investments.

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