Dialog Axiata Group Records Rs32.9Bn Revenue for Q1 2021

Dialog Axiata PLC announced its consolidated financial results for the three months ended 31st March 2021. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”).

All key business segments, namely, Mobile, Fixed Line, Digital Pay Television, International and Tele infrastructure businesses positively contributed to record a consolidated Revenue of Rs32.9Bn for Q1 2021, demonstrating a strong growth of 12% Year-on-Year (“YoY”) and 2% Quarter-on-Quarter (“QoQ”). Underpinned by Revenue growth, Group Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) grew 12% YoY albeit declining 5% QoQ to record at Rs13.7Bn for Q1 2021. The EBITDA margin was recorded at 41.6% for Q1 2021, remaining stable YoY.

The Group Net Profit After Tax (“NPAT”) demonstrated a strong growth of 64% YoY to record at Rs2.4Bn for Q1 2021 underpinned by strong EBITDA performance and contraction in finance cost partially offset by increase in forex losses.

However, on a QoQ basis, NPAT declined 29%, impacted by the steep depreciation of the Sri Lankan Rupee (“LKR”) against the United States Dollar (“USD”) by 7.1% for Q1 2021 versus a depreciation of only 0.8% and 4.6% for Q4 2020 and Q1 2020 respectively. The foreign exchange loss for the quarter was accordingly recorded at Rs2.1Bn which included a transactional loss of Rs0.4Bn and a non-cash translational loss of Rs1.7Bn. Normalised for the said foreign exchange losses NPAT was recorded at Rs4.6Bn for Q1 2021, up 47% YoY and 21% QoQ.

Dialog Group continued to be a significant contributor to state Revenues, remitting a total of Rs6.3Bn to the Government of Sri Lanka (“GoSL”) during Q1 2021. Total remittances included Direct Taxes and Levies amounting to Rs2.8Bn as well as Rs3.5Bn in Consumption Taxes collected on behalf of the GoSL.

The Group capital expenditure for the quarter ended 31st March 2021 reached Rs2.4Bn, resulting in a Capex to Revenue ratio of 7%. Capital expenditure was directed towards investments in High-Speed Broadband infrastructure to further expand Dialog’s leadership in Sri Lanka’s Broadband sector. Accordingly, the Group recorded Operating Free Cash Flow (“OFCF”) of Rs10.4Bn for Q1 2021. Group Net Debt to EBITDA ratio further improved to 0.42 times as at end of Q1 2021.

On 8th January 2021, Dialog Axiata PLC announced to Colombo Stock Exchange the acquisition of 100% shareholding in H One (Private) Limited, through its fully owned subsidiary Dialog Broadband Networks (Private) Limited (“DBN”). H One is the leading Microsoft services provider in Sri Lanka. The acquisition of H One would further strengthen Dialog’s expansive suite of enterprise solutions and would facilitate acceleration of the digital transformation of Sri Lanka’s Enterprise Sector.

During the quarter Dialog Group announced the commissioning of the Maldives Sri Lanka Cable system (“MSC”), enabling the delivery of high-speed broadband services. Dialog’s investment in the new high speed submarine cable will trigger the single largest infusion of International Bandwidth between Sri Lanka and Maldives to date. The MSC system is the second investment of its kind by Dialog, which follows its investment in the Bay of Bengal Gateway cable (“BBG”), offering high speed connectivity along with low latency between the Middle East, the Indian sub-continent and South-East Asia, which was commissioned in 2016.

At an entity level, Dialog Axiata PLC (the “Company”) continued to contribute a major share of Group Revenue (66%) and Group EBITDA (73%). Company recorded a 6% YoY growth in Revenue to reach Rs21.8Bn for Q1 2021 amid strong contributions from core Revenue streams. On a QoQ basis Revenue remained stable. EBITDA for Q1 2021 was recorded at Rs9.9Bn representing an increase of 8% YoY on the back of Revenue performance, albeit declined 5% QoQ due to increase in network maintenance related expenses. Amid stable Revenue and EBITDA performance, the Company NPAT was recorded at Rs1.9Bn for Q1 2021 up 18% YoY albeit declining 28% QoQ. As alluded to earlier the depreciation of the LKR against the USD impacted company NPAT. The foreign exchange loss for the company reached Rs2.0Bn for Q1 2021. Normalised for same, company NPAT was recorded at Rs3.9Bn for Q1 2021, up 17% YoY and 30% QoQ.

The quarter also marked the Sri Lankan consumers voting Dialog as the ‘Service Brand of the Year’ and ‘Youth Choice – Service Brand of the Year’ for the second consecutive year, and the ‘Telecommunication Brand of the Year’ for a record tenth year running at the prestigious SLIM People’s Awards 2021. Being voted by the public as the #1 Service Brand in Sri Lanka during a very challenging period due to Covid-19 pandemic, is a testament to Dialog’s long-held commitment towards delivering inclusive connectivity through innovative technology platforms and affordable services.

Dialog Television (“DTV”), continued to consolidate its leadership position in the Digital Pay Television space with a subscriber growth of 8% YoY, recording a total subscriber base of 1.6Mn as at end of March 2021. DTV Revenue recorded growth on both YoY and QoQ basis at 7% and 5% respectively to reach Rs2.4Bn for Q1 2021 driven by subscription Revenue. DTV EBITDA was recorded at Rs709Mn for Q1 2021 up 5% YoY underpinned by Revenue performance. However, DTV’s reported Net Loss increased to Rs286Mn for Q1 2021 relative to a Net Loss of Rs227Mn for Q1 2020 resulting mainly from the forex losses. Dialog Broadband Networks (“DBN”) featuring the Group’s Fixed Telecommunications, Broadband and International Businesses recorded Revenue of Rs9.3Bn for Q1 2021, up 25% YoY and 4% QoQ. The top line growth was mainly driven by favourable movement in international wholesale Revenue. The EBITDA for DBN grew 26% YoY to record at Rs3.1Bn in Q1 2021. Accordingly, DBN NPAT reached Rs922Mn for Q1 2021 relative to Rs273Mn for Q1 2020, due to decrease in depreciation and finance cost.

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