News From Telecom World

Sri Lanka’s Dialog Telekom – Good Customer Growth, but EBITDA Crashes

Posted on: March 16, 2009

Dialog Telekom’s Q4 08 report provides another example of how mobile telecoms growth in the developing world seems to have defied the economic downturn from a consumer perspective: the Sri Lankan market leader posted a record quarterly gain of 531k, more than 200k higher than its previous best. This took its total customer base past the 5m mark to finish the year on 5.51m. In proportionate terms, quarterly growth stood at 10.7%, the highest figure seen since Q2 06, while annual growth stood at 29.3%. Although this was down from 37.2% in 2007, it remains a strong figure.

The lion’s share of fourth-quarter growth was in the prepaid segment, which added 504k during the quarter to finish the year on 4.86m. It saw annual growth of 31.7% compared to 13.9% for the contract segment, and as a result customer quality was weakened, from 13.4% contract at the end of 2007 to 11.8% contract at the end of 2008. In real terms, the contract customer base stood at 0.65m at the end of 2008.

A glance at the ARPU figures shows that growth came at some cost. Prepaid ARPU fell by 22.6% compared to Q4 07 with a quarterly average of SLR 319 per month. Most of the decline came in the first quarter of 2008, which saw a SLR 53 quarter-on-quarter drop, but Q4 08 also saw a significant fall of SLR 21 compared to the Q3 08 figure. As for contract ARPU, here the Q1 08 drop was even more dramatic at SLR 125. Again, though, the Q4 08 decline was substantial at SLR 63, which took the quarterly average to SLR 1,404 per month. Meanwhile, blended ARPU fell 23.2% to SLR 453 as a result of these declines and the weakened mix.

Sri Lankan consumers may have been unpeturbed by local or global economic circumstances in 2008, but Dialog was not. Despite the strong customer growth, annual revenues grew by just 1.0% to SLR 33,108m. A 48.4% rise in costs saw gross profit down 26.0% to SLR 15,478m, while EBITDA fell 41.6% to SLR 8,370m. Fourth-quarter EBITDA was even worse hit, a massive 75.6% decline taking the figure to SLR 740m from SLR 3,027m in Q4 07. This was partly due to exceptional items, but even on a normalised basis there was a fall of 51.6% to SLR 1,466m.

Source: cellular news


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