Telco giant’s profits curbed by expected court order

During the 1st half of the year SLT, the integrated telecommunication service provider made an after tax company profit of Rs. 2.5 billion.

The telecom giant made this profit, after reversing an estimated amount of Rs. 875 million from its revenue considering the tariff reduction, in relation to the settlement of the Supreme Court appeal regarding the tariff revision implemented in 2003.

However, the group profit has increased by 10% to Rs.2.54 billion, compared to Rs.2.3 billion profits in the 1st half of 2006 as Mobitel has turned around and international and Data oriented revenues have improved.

Commenting on the proposed tariff reduction the CEO SLT, Shoji Takahashi said “there will be a short term impact on our revenue and profits from the tariff reduction.

However we believe that in the competitive environment the reduced tariff will stimulate demand and this will help to mitigate the impact on revenue.

The new time based tariff structure will give consumers a benefit, and thus encourage greater usage. SLT has confidence on its revenue growth despite the tariff reduction.”

During the first six month the group has recorded total revenue of Rs. 20.7 billion. This is a 6% growth compared to the same period of the previous year.

Due to the provision made against the possible tariff reduction the domestic revenue has dropped by 3%.

The CDMA new connections given during the 1st half 2007 has reduced when compared with the same period in the previous year and also the reduction in CDMA new connection charge has contributed for the revenue from CDMA new connections to decrease by 29%.

During the 1st half, 95,000 CDMA new connections have been given and the customer base reached to around 380,000. A more competitive CDMA new connection charge of Rs. 12,000/- (including VAT) was introduced in May 2007.