Dialog Grows 26% in FY 2022, Forex Flips NPAT to Negative Rs33.4Bn while Investments in Infrastructure Tops Rs52Bn

• FY 2022 Group Revenue Growth at 26% to record Rs178.1Bn and Q4 2022 Revenue Growth at 12% QoQ and 37% YoY to record Rs50.9Bn.
• One off /Non-cash provisions and Impairments of Rs12.1Bn in Q4 2022 and YTD Forex Losses amounted to Rs30.3Bn
• Rs35.7Bn Contributed to GoSL via Direct and Indirect Taxes, Fees and Levies up 54% YoY
• FY 2022 Investments in High Speed Broadband and other Infrastructure Tops Rs52.0Bn up 64% YTD

Dialog Axiata PLC announced its consolidated financial results for the year ended 31st December 2022. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

FY 2022 was one of the most challenging years in Sri Lanka’s recent history marked by social unrest, political uncertainty and an economic crisis. During Q4 2022, key macro indicators stabilized as the Sri Lankan Rupee (“LKR”) continued to remain stable (0.4% depreciation in Q4 2022 but depreciated 82.3% YTD 2022) against the United States Dollar (“USD”) and inflation commenced a declining path to reach 57.2% by year end (from 69.8% by end Q3 2022). The concluded quarter has taken into account the one off/non-cash provisions amounting to Rs12.1Bn. These provisions were compelled by the changing business / macroeconomic landscape and the increase in the company's weighted average cost of capital (“WACC”) due to elevated market interest rates.

The Group concluded the Financial Year (“FY”) with positive revenue performance across all business segments, namely, Mobile, Fixed, Digital Pay Television, International, Digital Platforms and Tele- infrastructure businesses. Group consolidated revenue was recorded at Rs178.1Bn for FY 2022 demonstrating a growth of 26% Year-to-Date (“YTD”). Group Revenue for Q4 2022 was recorded at Rs50.9Bn up 12% Quarter-on-Quarter (“QoQ”). However, the operating cost escalations and forex depreciation along with one-off provisions led to Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) declining 12% YTD to reach Rs51.6Bn for FY 2022 whilst Group EBITDA reached Rs10.1Bn for Q4 2022, down 28% QoQ. Normalised for the one-off provision Group EBITDA decline moderated to 5% YTD to reach Rs55.8Bn for FY 2022 albeit increasing 2% QoQ to reach Rs14.3Bn for Q4 2022. The achievement of this performance was underpinned by well-coordinated delivery of innovative and affordable service packs, superior network and customer experience amidst a challenging business atmosphere. It also demonstrates the fruition of cost rescaling and resilience actions taken by the Group.

The Group Net Profit After Tax (“NPAT”) recorded a loss of Rs33.4Bn for FY 2022 underpinned by lower EBITDA performance, forex losses, higher depreciation and finance cost. Group NPAT for Q4 2022 recorded a loss of Rs8.3Bn. Normalized for the one-off provisions, impairment and forex losses, the Group NPAT was recorded at Rs9.0Bn for FY 2022, down 54% YTD and Rs1.2Bn for Q4 2022 down 35% QoQ.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs35.7Bn to the GoSL during the financial year ended 31st December 2022 and Rs9.7Bn for Q4 2022, which represent a 54% increase YTD. Total remittances included Direct Taxes and Levies amounting to Rs13.3Bn and Rs22.4Bn in Consumption Taxes collected on behalf of the GoSL.

The Group remained steadfast to meet growing demand from both retail and corporate sectors, whilst also ensuring seamless customer experience and leadership in Sri Lankas’ Broadband and ICT sectors. Investments were channeled during the year towards network expansion adding over 450 new sites, capacity additions to over 2,100 sites and deployment of alternate energy solutions such as solar and Li- ion batteries to improve network availability. Accordingly, the YTD capital expenditure reached Rs52.0Bn for FY 2022 up 64% YTD.

Dialog Group, being the first telecommunications service provider in the South Asian region to demonstrate 5G capabilities in 2018, announced the successful testing of mmWave 5G for the first time in South Asia through its fully owned subsidiary Dialog Broadband Networks (Pvt) Ltd. Dialog achieved 5G Download speeds greater than 4 Gbps on non-standalone (“NSA”) mode using mmwave attaining significantly higher throughputs than current standards. Deployment of mmWave technology will enhance the fixed broadband performance levels and enable low-latency industry applications including industrial automation, healthcare, intelligent transport systems, and virtual reality.

During the quarter Dialog Group also announced plans to shut down its 3G data network in 2023 to free up spectrum and increase the capacity of its 4G Broadband network. This decision comes as part of Dialog Axiata's ongoing efforts to provide the best mobile experience for its customers and is part of its continued efforts to introduce best-in-class, next-gen technologies to Sri Lankan consumers. Dialog’s mobile network continued to be recognized as the #1 network across multiple KPIs including Experience, Speeds, Coverage and Consistency as measured by independent monitoring platforms.

At an entity level, Dialog Axiata PLC continued to contribute a major share of Group Revenue (57%) and Group EBITDA (69%). Company revenue was recorded at Rs101.4Bn for FY 2022 up 11% YTD and Rs26.5Bn for Q4 2022 up 2% QoQ driven mainly by Data and Voice segments. The Company profitability continued to be impacted by the higher network spend due to energy costs resulting from power cuts along with increase in operating costs driven by inflation, LKR depreciation and the one-off provisions as alluded to earlier. Accordingly, EBITDA was recorded at Rs35.4Bn for FY 2022 representing a decline of 12% YTD and Rs5.9Bn for Q4 2022 down 43% QoQ. Consequently, Company NPAT recorded a loss of Rs38.3Bn for FY 2022 and a loss of Rs18.1Bn for Q4 2022.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with a strong subscriber base of 1.7Mn for the year ended 31st December 2022. Accordingly, DTV revenue recorded a strong growth of 14% YTD to reach at Rs12.0Bn for FY 2022. However due to cost escalations from LKR deprecation, DTV EBITDA declined 57% YTD to reach Rs1.6Bn for FY 2022. Consequently, DTV Net Loss increased to Rs4.2Bn for FY 2022. Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded revenue of Rs68.8Bn for FY 2022 up 54% YTD resulting from increase in International Wholesale and Fixed Broadband Revenue. DBN EBITDA recorded a growth of 2% to reach Rs14.8Bn for FY 2022. Accordingly, NPAT was recorded at Rs3.3Bn for FY 2022.

Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded revenue of Rs68.8Bn for FY 2022 up 54% YTD resulting from increase in International Wholesale and Fixed Broadband Revenue. DBN EBITDA recorded a growth of 2% to reach Rs14.8Bn for FY 2022. Accordingly, NPAT was recorded at Rs3.3Bn for FY 2022.

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
Dialog sustainability: https://dlg.dialog.lk/sustainability