SLT Group posts Rs 4,399 m profit in first 9 months

Sri Lanka Telecom PLC (SLT), the dominant telecommunications service provider of the nation has announced recently the financial results of the company and their associated groups for the nine months that ended September, 30 2008.

The subsidiaries of SLT Group are Mobitel, Sri Lanka Telecom (Services), SLT Publications, Sky Network, SLT Hong Kong Limited, SLT Manpower Solutions and SLT Vision Com.

Despite the adverse market conditions, the group has been able to maintain the same profits level as of the first nine months of the previous year. During the nine months ended September 30, 2008 the group has achieved a net profit after tax amounting to Rs.4, 399 million and records a marginal growth compared to Rs.4, 335 million for the same period of the previous year.

The high performance of SLT’s fully owned mobile arm, Mobitel, has improved the group revenue growth by 10% to Rs.35,049 million year on year. Further, 45% growth of data oriented services offered by SLT has also strengthened the increase of revenue. Reduction in CDMA new connections revenue by 70% amounting to Rs.616 million has significantly impacted revenue growth. The domestic revenue has been maintained at the same level as the previous year, despite the tariff reduction in November 2007 and inflation driven economic factors. Operational expenditure of the group for the nine months has increased by 18% due to inflationary driven factors. Staff related costs have increased by 30% to Rs.5,633 million while utility and transport related costs have increased by 42% to Rs.6,971 million. The cost of CDMA sales has reduced by 55% to Rs.711 million, while provision for bad debts has increased by 41% to Rs.1, 234 million. This is mainly due to outstanding debts owed to CDMA.

Sri Lanka Telecom PLC, has reported an after tax net profit of Rs.3,609 million during the nine months ended September 30, 2008 a decrease of 16% compared with the same period of the previous year. The company revenue has slightly dropped from Rs.27,636 million to Rs.27,484 million when compared with the revenue earned during the 9 months of the previous year. The drop in revenue is mainly due to the reduction in number of CDMA new connections given and also the reduction in the connection charges, during the period under review.

The prevailing competitive nature of the market has forced the company to reduce the new connection charges of CDMA.

Overall, the domestic revenue levels has been maintained as that of the corresponding period of the pervious year despite inflation driven economic factors and the tariff revision implemented last year. SLTL’s wholly owned subsidiary and mobile operator Mobitel (Pvt) Ltd., recorded a strong growth in the first nine months of operations in 2008.

The subscriber base has increased by 103% to 2.26 million when compared with the corresponding period of last year. This growth was contributed through the continued growth in prepaid base as well as the rapid uptake of postpaid subscribers following the introduction of the “Upahara Package” to the government sector.

Revenue Components	            Jan to Sep     	Growth                      
				   2007	  2008

PSTN and CDMA call and rental 
charges and  PSTN new connection  
revenue deferred		15,231	15,210		(0%)

CDMA new connection revenue	2,061	616		(70%)

International revenue		6,784	6,517		(4%)

Data & other operating revenue	2,869	4,147		45%

Subsidiary revenue		4,960	8,559		73%

Total group revenue		31,905	35,049		10%