SLT posts Rs 1.06 billion net profit for First Quarter 2005

Sri Lanka Telecom, recently posted a substantial three months profit of Rs. 1.06 billion after tax. This figure was achieved in spite of negative market conditions and the liberalisation of the telecommunication Industry witnessed recently, the company said yesterday.

This number is still impressive although it has been reduced to Rs. 909 million due to moderate losses of its fully owned subsidiary Mobitel. The net earnings per share of the group for 2005 was a substantial Rs. 2.01 as against Rs. 1.43 in 2004.

There was also welcome news that the company experienced a marginal increase in revenue of 2% as against the same period in 2004, mainly from an increase in local call revenue and Internet Provider (IP) oriented revenue. However, expenditure for the same time also increased by 5% mainly due to the efforts to improve the network through repair and maintenance.

The international telecom levy of Rs. 157 million which was posted for the first three months also added to this expenditure, but refund of 66.67% would be available which could be claimed against the rollout of rural telephone connections.

SLT shows by way of this statement that it has continued to demonstrate its financial stability and resilience by meeting competitive forces while still maintaining its profitability.

The company also further improved its position by settling a substantial number of high interest bearing loans during the last quarter in the early part of the current financial year with proceeds from its International Bond issue.

This bond issue has effectively reduced the interest cost by 50% for company and 30% for the group. The group's long-term debt is currently at Rs. 20.1 billion while SLT's debt is at Rs. 15.3 billion-another marked improvement from Rs. 16.1 billion for the same period in 2004.

This indicator shows a very healthy cash flow and denotes a good trend for the future. Meanwhile, the company's Earnings Before Interest Taxes Depreciation and Amortisation (EBITDA) has remained at the same level since 2004. This figure demonstrates that SLT's efforts at profitability through efficient management of resources have helped achieve the healthy bottom line.

This year, SLT has demonstrated the company's ability to maintain its competitive nature despite the liberalization the company has adopted.

A drop in international call charges, which subsidized the domestic operations, has seen the company utilising other value added products such as ADSL, IPVPN, SLT Plus, Internet services and a host of other new products to increase its market share.

Although international revenue was lost at the initial stages of the revision, a subsequent substantial increase in international call traffic volumes has resulted in allowing earnings to match revenues of the pre-liberalization period This will now enable the company to maintain the international call traffic revenues.

The value added growth of new products and the company's aggressive marketing outlook will also ensure that SLT remains strong in the future.

This quarter's earning results have further reiterated SLT's true potential which allows this stock to remain highly liquid in the share market resulting in an ongoing advantage to shareholders.