Financial year ending March 31, 2009:

SLT announces favourable results

Owing to its strength and resilience to turbulent market conditions, the integrated telecommunication services provider, Sri Lanka Telecom (SLT) was able to announce favourable results for its first quarter of the financial year ending March 31, 2009. The Group has achieved a net profit of Rs. 971 million during this quarter.

“In spite of the adverse economic scenario and gloomy financial conditions prevailing worldwide, SLT has been able to show resilience to weather the storm and bring about performance.” Chairperson of the SLT Group Leisha De Silva Chandresena said.

The achievement was 42 percent below, the same quarter compared to that of the previous year due to the increase of operational expenditure and depreciation. Thus, the company achieved a net profit of Rs.734 million, a reduction of 46 percent compared to the corresponding quarter of the previous year as a result of revenue reductions.

During this quarter the group revenue was Rs. 11,837 million, 2 percent higher than the first quarter of 2008. Thus, the company level revenue had dropped by 11 percent to Rs. 8,392 million.

During the quarter, Broadband and Data revenue has grown by 25 percent to Rs.1,595 million quarter on quarter.

Owing to the prevailing economic conditions, Wired and CDMA subscribers have been compelled to scale down usage while some customers have migrated to other fixed and mobile networks seeking budget price packages. As a result, these adverse conditions have brought down the Wired and CDMA revenue by 19 percent and 18 percent respectively.

Various taxes and levies imposed on fixed services by the Government has further aggravated this problem and put much pressure on customers to be more conscious about scaling down usage.

Pressure from global recession has had an impact on international telecommunication traffic and pricing. These combined with emerging competitors, has brought down international revenues by 15 percent to Rs. 1,980 million.

Apart from the prevailing inflationary conditions, in line with the capacity and coverage expansions of Mobitel and other subsidiaries, the operating costs have increased by 24 percent to Rs. 6,894 million compared to the same quarter of the previous year.

The company has been able to manage its operating cost at Rs. 4,702 million, an increase of only 7 percent compared to the corresponding period of the previous year. This is well below the prevailing inflationary level.

The increase of operating expenditure of the company was mainly due to a 7 percent increase of staff cost, while the careful management of repair and maintenance costs and strict credit control on bad debts has led to the reduction of expenses.

Depreciation and amortization at the Group level has increased by 4 percent to Rs. 2,838 million, compared with the first quarter of 2008 while the corresponding amount of the company has dropped by 4 percent to Rs. 2,150 million. The Group level increase was due to a contribution by Mobitel in line with their recent capacity and coverage expansions.