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Suntel Limited recorded a net profit of Rs. 200 million for the year ended December 31, 2002 - an eight-fold improvement from Rs. 23 million in the previous year.

Increases in profit were reflected in key areas in the year 2002 including revenue 13.5%, earnings before interest and tax depreciation ammortisation (EBITDA) 17.6%, earning before interest tax (EBIT) 16.0% and net result 769.6%.

"We are satisfied with the revenue increase of 13.5% over the previous year - achieved in a year of volatile and relatively unstable political and regulatory environment. The entirety of this increase was derived from mainstream operations, which have come about through increased customer confidence and market acceptance of Suntel's innovative solutions," a company spokesman said.

The achievements in EBITDA and EBIT, both which reflect higher increases than that achieved with revenue, signifies the efforts the company takes in managing its costs. The decreasing trend in lending rates has contributed towards improving the company's debt service costs and with capital repayments commencing in 2003 the company projects lower financial costs in the short to medium term, he said.

While recognising that this is a significant year of profitability for the company, it must be understood that the company needs a further two to three years of profitability at this level before it can cover the accumulated losses of Rs. 1,030 million reflected in its balance sheet as of December 31, 2002, the spokesman said.

Although Suntel continues to implement a well-managed cost structure as a means of ensuring adequate margins to sustain a viable operation like all other business enterprises, it is compelled to take a periodic tariff increase to compensate at least partially inflationary increases on operating costs. This is the only way by which it can ensure adequate margins to sustain a viable operation.

Accordingly, during the first half of 2002, the company revised its rentals and tariffs in order to index revenues with rising operating costs. These increases were effected after nearly two years owing to the delays experienced within the regulatory framework.Whilst being totally in favour of de-regulation Suntel hopes to see a level playing field being set for fair competition among the existing and potential new operators, he said.

Therefore, operators who have invested substantial investments must be given the possibility to generate adequate returns in order that they could plough back some of these profits into the development of telecommunications infrastructure in the country, the spokesman said.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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