Feb 18, Colombo: Sri Lanka's premier telecommunications service provider, Dialog Axiata PLC Friday announced its consolidated financial results for the financial year ended 31st December 2018.
.Financial results included those of Dialog Axiata main company and of the Dialog Axiata Group post-consolidation with subsidiaries Dialog Broadband Networks (DBN), Dialog Television (DTV), Digital Holdings Lanka (DHL) and Dialog
The Group concluded the Financial Year 2018 on a strong note, continuing growth momentum across all key business segments viz. Mobile, Fixed, Digital Pay Television, International and Tele infrastructure businesses to record consolidated revenue of Rs. 109.2 billion, demonstrating a growth of 16% Year-to-Date (YTD).
The Group revenue growth moderated to 2% Quarter-on-Quarter (QoQ) to be recorded at Rs. 28.5 billion for Q4 2018.
On the backdrop of revenue growth and cost optimization, Group Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) grew 29% YTD and 15% QoQ to reach Rs. 43.6 billion for FY 2018 and Rs. 12.5 billion for Q4 2018 respectively. The Group EBITDA margin for FY 2018 was accordingly recorded at 40%.
Notwithstanding the strong EBITDA performance, the Group was significantly impacted by the continued depreciation of the Sri Lankan Rupee against the US Dollar at 19.2% for FY 2018 resulting in a non-cash translational foreign exchange loss of Rs. 4.7 billion for the year.
Consequently, the Group Net Profit After Tax (NPAT) declined 30% YTD to be recorded at Rs. 7.5 billion for FY 2018. The QoQ
NPAT contracted 95% to reach a modest Rs. 0.1 billion due to forex losses and higher depreciation. Group NPAT post normalization for the non-cash translational foreign exchange losses was recorded at Rs. 12.2 billion for FY 2018, representing an increase of 9% YTD.
The quarter also featured significant one-off gains and charges. The Supreme Court of Sri Lanka ruled in favor of the company's fully owned subsidiary DBN on 14th December 2018, leading to a reversal of provision to the value of Rs. 3.7 billion during Q4 2018. The provision was made as a matter of prudence in FY 2012 for a possible claim of the said amount consequent to a judgement delivered by the Commercial High Court of Sri Lanka against Suntel Limited on 9th March 2012.
Further in FY 2017 the Group embarked on an organization transformation journey to accelerate simplification and digitization of business activities, processes and competencies to fully leverage on capabilities of digital platforms and technologies. One-off costs related to this program is estimated to be Rs. 2.5 billion which has been provided for in the financial statements during Q4 2018.
Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs. 34.1 billion to the Government of Sri Lanka during the financial year ended 31st December 2018. Total remittances included Rs. 8.5 billion in Direct Taxes and Levies as well as Rs. 25.6 billion in Consumption Taxes collected on behalf of the government
In line with the financial performance of the Group and taking into account the forward investment requirements to serve the nation's demand for Telecommunication and Digital services, the Board of Directors of Dialog Axiata PLC at its meeting held on 15th February 2019, resolved to propose for consideration by the Shareholders of the Company, a cash dividend to ordinary shareholders amounting to thirty seven cents (Rs. 0.37) per share totaling to Rs. 3.0 billion. The said dividend, if approved by shareholders, would translate to a payout of 40% of consolidated Group NPAT for FY 2018. The dividend so proposed will be considered for approval by the shareholders at the Annual General Meeting (AGM) of the Company, the date pertaining to which would be notified in due course.
The Group capital expenditure for the year ended 31st December 2018 totaled to Rs. 30.6 billion, up 12% YTD representing a Capex to Revenue ratio of 28%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Notwithstanding the expansion of capital investments, the Group recorded Operating Free Cash Flow (“OFCF”) of Rs. 5.2 billion for FY 2018. Group Net Debt to EBITDA ratio remained healthy at 0.91 times as at end available spectrum in the 3.5GHz band for the piloting of pre-commercial 5G services.
Dialog's pilot 5G transmission delivers speeds in excess of 2 Gbps in a real-world setting including base stations installed and commercial grade 5G Home Gateway Routers, which can deliver 5G throughput to a host of wireless devices and applications across the spheres of video, gaming and automation.
At an entity level, Dialog Axiata PLC continued to contribute a major share of Group Revenue (77%) and Group EBITDA (70%). On the back of its mobile customer base of 13.8 million subscribers, Company Revenue for FY 2018 grew by 9% YTD to reach Rs. 84.5 billion with revenue for Q4 2018 being recorded at Rs. 21.4 billion, up 1% QoQ. Underpinned by revenue performance and cost optimization, Company EBITDA increased 13% YTD to reach Rs. 30.4 billion for FY 2018 translating to an EBITDA margin of 36.0%. The Company EBITDA declined 33% QoQ to record Rs. 5.8 billion for Q4 2018 mainly due to the aforementioned one-off provision on organizational transformation.
The depreciation of the LKR as alluded to earlier impacted the Company as the NPAT declined 58% YTD to reach Rs. 4.4 billion for FY 2018. The NPAT also declined on a QoQ basis and resulted in a Net Loss of Rs. 2.6 billion for Q4 2018. On normalizing for the non-cash translational foreign exchange losses, Company NPAT was recorded at Rs. 8.9 billion for FY 2018, down 18% YTD.
Dialog Television (DTV), continued to consolidate its leadership position in the Digital Pay Television space with a subscriber growth of 17% YTD to exceed 1.1Mn as at end of December 2018. DTV Revenue grew by 25% YTD to be recorded at Rs. 7.5 billion for FY 2018. DTV EBITDA was recorded at Rs. 1.8 billion for FY 2018, up 221% YTD, mainly driven by SLFRS 15 impact. Normalised for the SLFRS 15 impact, EBITDA declined 68% YTD to reach Rs. 0.2 billion for FY 2018. DTV reported Net Loss increased to Rs. 915Mn for FY 2018 relative to a Net Loss of Rs. 736Mn for FY 2017.
Dialog Broadband Networks (DBN) featuring the Group's Fixed Telecommunications and Broadband Business continued its strong performance to record a revenue growth of 39% YTD to reach of Rs. 17.2 billion for FY 2018. Driven by strong revenue performance and aforementioned one-off gain to the value of Rs. 3.7 billion, DBN EBITDA grew 73% YTD to reach Rs. 12.0 billion for FY 2018. Accordingly, DBN NPAT was recorded at Rs. 5.0 billion for FY 2018, up 182% YTD. Normalised for the one-off gain, DBN NPAT was recorded at Rs. 1.3 billion for FY 2018, representing a decrease of 27% YTD.