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Monday, 26 April 2010

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SLT Group Q1 profit Rs 609 m

Price war erodes margins:

[SLT Group]

* Operating revenue for Q1 Rs 12 billion

* Net profit after tax for Q1 Rs 609m

* Operating costs for Q1 Rs 7,359m

SLT released its Group and Company financial results for the quarter ending March 31, 2010, with a substantial increase in the Group net profit after taxation compared to the previous quarter. The Company and the Group have recorded Rs 415m and Rs 609m net profit after tax profit respectively, even after provisioning Rs 188m for VRS costs of the company. This is mainly due to the impressive performance of the subsidiary Mobitel, the mobile arm of SLT.


Chairperson
Leisha De Silva Chandrasena

Group Chairperson, Leisha De Silva Chandrasena said due to the strategic initiatives taken by SLT to face the effects of turbulent market conditions in the industry and the strong resilience shown by SLT in the face of challenges, the Group has been able to achieve good results.

Mobitel, our mobile arm has contributed significantly to increase SLT Group profit through good performance in the face of strong competitionĒ, she said. During the first quarter, the Company and the Group have achieved operating revenue of Rs 8,168 million and Rs 12,048 million respectively. This shows a marginal increase compared to the previous quarter, with some improvements on a corresponding quarterly basis in the Group, the company said.

With continued efforts the Company and the Group have been able to keep its operating costs significantly below the previous quarter at Rs 5,061m and Rs 7,359m respectively.

Meanwhile the interest expense has dropped due to the repayment of the US$100m bond in November 2009. Correspondingly the interest income dropped due to the utilization of the sinking fund established for the repayment of bond. During the quarter the Company introduced another VRS (Voluntary Retirement Scheme) spending about Rs 188m, as a part of itís strategy to improve the productivity and control the expenses of the Company. SLT continues to swell its fixed broadband customer base, with an increase of 57 percent during the past 12 months, with more attention paid to these services, as they are strategically important for the growth of the Group while fulfilling emerging customer needs.

The intense competition with the entry of the fifth mobile operator during first quarter of 2009 saw an escalating price war that eroded margins of all operators and a pattern of customer switching between operators emerged.

SLT Group too was not insulated from the industry shocks and was forced to re-adjust to the market realities. SLTís subsidiary, SLT Publications has continued to contribute to the Group achievements.

Therefore, despite all the adverse conditions the SLT Group continued to perform significantly well thereby improving stakeholder values.

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