Dialog Posts Strong 1H despite Q2 Challenges

Dialog Axiata PLC announced its consolidated financial results for the six months ended 30th June 2019. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

The Group ended the 1st Half of 2019 on a strong note, continuing its growth momentum across Mobile, Fixed Line, Digital Pay Television and Tele-infrastructure businesses to record a consolidated revenue of Rs58.1Bn, demonstrating a growth of 10% Year-to-Date (“YTD”) while Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) grew 11% YTD to reach Rs23.1Bn. The adoption of SLFRS 16, ‘Leases’ with effect from 1 January 2019, translated to an EBITDA upliftment of Rs1.3Bn which is a 2.2pp increase in the EBITDA Margin which was recorded at 39.8% for 1H 2019.

The 2nd Quarter was marked by externalities as Easter Sunday incidents including social media blockage and business slowdown impacted both revenue and profitability. Aggressive competition and data re- pricing towards end Q1 2019 also aggravated the impact. Consequently, the Group revenue remained flat on a QoQ basis to record at Rs29.1Bn for Q2 2019. EBITDA declined 9% QoQ to record at Rs11.0Bn for Q2 2019 amid muted revenue growth and escalation in costs. On a YoY basis Revenue and EBITDA grew 9% and 5% respectively.

The Group Net Profit After Tax (“NPAT”) demonstrated a growth of 21% YTD to record at Rs6.9Bn for 1H 2019 underpinned by strong EBITDA performance. On a QoQ and YoY basis NPAT declined 59% and 30% respectively to reach Rs2.0Bn for Q2 2019.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs14.8Bn to the Government of Sri Lanka (GoSL) during the first six months of 2019. Total remittances included Direct Taxes and Levies amounting to Rs5.2Bn and Rs9.7Bn in Consumption Taxes collected on behalf of the GoSL.

Group capital expenditure for 1H 2019 was recorded at Rs8.7Bn representing a capex to revenue ratio of 15%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group’s position in Sri Lanka’s Broadband sector.

During the quarter BrandFinance recognised Dialog as Sri Lanka’s Most Valuable Brand for 2019 with a valuation of Rs54.2Bn whilst awarding the title ‘Top Telecommunications Brand’ for 10 years’. The growth in the brand reflects Dialog’s success in establishing itself as the main driver of Sri Lanka’s digital transformation and its sustained investments into introduction of new technology into the country.

Group Operating Free Cash Flow (“OFCF”) was recorded at Rs11.5Bn for 1H 2019 up from Rs5.8Bn recorded for 1H 2018. Dialog Group continued to exhibit a low geared balance sheet as the Net Debt to EBITDA ratio remained healthy at 0.91 times as at end of June 2019.

At an entity level, Dialog Axiata PLC (the “Company”) continued to contribute a major share of Group Revenue (72%) and Group EBITDA (76%). Company revenue declined 1% YTD to record at Rs41.6Bn for 1H 2019 mainly due to 25% YTD contraction in international wholesale revenue. Due to the externalities alluded to earlier the revenue remained flat QoQ whilst declining 2% YoY to record at Rs20.8Bn for Q2 2019. Company EBITDA was recorded at Rs17.6Bn for 1H 2019 representing an increase of 12% YTD. EBITDA was recorded at Rs8.3Bn for Q2 2019 declining 12% QoQ albeit increasing 3% YoY. The adoption of SLFRS 16 had a positive impact on the 1H performance of the Company resulting in an EBITDA upliftment of Rs1.2Bn for 1H 2019.

The Company NPAT demonstrated a growth of 32% YTD to be recorded at Rs6.8Bn for 1H 2019, driven by strong EBITDA growth.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with a subscriber growth of 27% YoY to reach 1.3Mn subscribers by end 1H 2019. Underpinned by growing subscriptions DTV Revenue increased by 17% YTD to be recorded at Rs4.3Bn for 1H 2019 while revenue was recorded at Rs2.2Bn for Q2 2019 up 5% QoQ and 23% YoY. On the back of strong revenue performance DTV EBITDA grew by 3% YTD to reach Rs1.1Bn for 1H 2019. However, DTV Net Loss marginally increased to Rs269Mn in 1H 2019 relative to a Net Loss of Rs256Mn for the corresponding period in 2018.

Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded revenue of Rs13.4Bn for 1H 2019 up 87% YTD due to the transfer of wholesale business albeit revenue remaining flat on a QoQ basis to reach Rs6.7Bn. Downstream of revenue performance, DBN EBITDA recorded a growth of 11% YTD to reach Rs4.7Bn for 1H 2019. DBN NPAT however declined 26% YTD to be recorded at Rs0.8Bn for 1H 2019 due to increase in depreciation induced by aggressive investments into fixed 4G LTE.

More details are available at the following links:
Dialog Axiata PLC direct weblink: https://www.dialog.lk/quarterly-reports
CSE direct weblink: https://www.cse.lk/home/company-info/DIAL.N0000/financial