Dialog records Rs 5.05 b profit for 2010

Dialog Axiata PLC announced, its financial results for the year ended December 31 2010 yesterday.

Financial results included those of Dialog Axiata PLC and of the Dialog Axiata Group (‘Group’) post consolidation with subsidiaries Dialog Broadband Networks and Dialog Television.

Dr Hans Wijayasuriya

The Group delivered strong performance in terms of profitability, recording NPAT of Rs 5.05 billion for FY 2010 a 141 percent increase year on year (YoY).

The Group NPAT was driven by strong performance at the company level, with Dialog Axiata PLC featuring the Group’s mobile business, posted a profit of Rs 1.56 billion for Q4 and taking the full year profit to Rs 6.55 billion, an increase of 171 percent relative to 2009.

Performance during 2010 was underpinned by a healthy momentum in revenue growth, positive outcomes of strategic cost rescaling, balance sheet restructuring initiatives and consistent financial discipline across all aspects of the business.

Subsidiaries DTV and DBN registered gains YoY at both EBITDA and NPAT levels, demonstrating traction in terms of the Group’s Fixed Line, Broadband and Television businesses. Relative to 2009, EBITDA (positive) and NPAT (negative) improved by 243 percent and 80 percent for DTV and 169 percent and 50 percent for DBN respectively. Dialog Group revenues were recorded at Rs 41.42 billion for 2010, up 14 percent YoY and 2 percent Quarter on Quarter (QoQ).

The Group EBITDA was recorded at Rs 15.08 billion, up 55 percent YoY, and down by a marginal 2 percent on QoQ basis.

The Group EBITDA margin improved by nine percentage points YoY, to reach 36 percent. Underpinned by the positive EBITDA growth trajectory, the Group NPAT recorded a strong growth of 141 percent YoY.

The Group NPAT for the fourth Quarter however displayed a 25 percent reduction when compared to Q3 2010, driven largely by higher depreciation and lower foreign exchange gain in Q4 2010.

The company recorded revenues of Rs 9.89 billion and Rs 37.95 billion for Q4 and FY 2010 respectively.

The company revenue grew by 14 percent compared to 2009 and 2 percent relative to the previous quarter.

The Company’s revenue trajectory was driven by the growth in Mobile Voice and VAS, mobile broadband, Global and Tele-Infrastructure businesses.

The Company continued to extract positive outcomes from strategic cost rescaling initiatives.

Operating costs (excluding depreciation and non-recurring charges for 2009) reduced by 8 percent in FY 2010, while remaining flat on QoQ basis. Operating cost improvements YoY were driven primarily by reductions in operational overheads and manpower related expenses.

Direct cost (excluding depreciation) grew by 9 percent YoY (6 percent when normalised for interconnect costs introduced in 2010) and 11 percent QoQ.

Increase in direct cost was driven in the main by international origination costs and outbound roaming costs in tandem with revenue growth accruing from the corresponding lines of business.

DBN featuring the Fixed Telephony, Fixed Broadband and Data Transmission businesses of the Dialog Group continued to consolidate its positive performance trend recording its third successive quarter of positive EBITDA.

DBN EBITDA was recorded at Rs 285 million, for 2010 a significant 169 percent improvement compared to 2009. EBITDA improvement was driven in the main by substantial reductions in operating and direct costs accruing from cost rescaling programmes implemented over the past quarters.

DBN EBITDA in Q4 2010 show a reduction of 32 percent on a QoQ basis, due to an exceptional provision of Rs 100 million with respect to VAT recovery in the context of the emergent VAT exempt environment in the Telecommunications sector.

On the backdrop of lower EBITDA and the ongoing acceleration of depreciation pertaining to DBN’s CDMA and Wimax networks, NPAT was recorded at negative Rs 348 million and negative Rs 1.3 billion in Q4 2010 and FY 2010 respectively.

Accordingly, NPAT for FY 2010 recorded an improvement of 50 percent compared to 2009.

DTV demonstrated similar consolidation of performance improvements, recording an EBITDA of Rs 343 million for 2010, an improvement of 159 percent and 243 percent on QoQ and YoY basis respectively.

EBITDA growth YoY was underpinned by a strong increase in usage revenues on the backdrop of reductions in operating and direct costs accruing from a continued focus on strategic cost rescaling initiatives.

Accordingly, DTV reported a NPAT for FY 2010 of negative Rs 154 million a strong improvement in profitability of 80 percent relative to 2009.