SLT records Rs.124mn net in 4Q; but operating conditions remain challenging
Sri Lanka Telecom PLC (SLT), the leading fixed telecommunication services provider, turned a net profit of Rs.124 million or 7 cents a share during its October-december quarter from a loss of Rs.383 million incurred during the corresponding period in 2015, the interim results released to the Colombo Stock Exchange showed.
Although the top line was up about a billion rupees to Rs.18.1 billion, the bottom line was largely buttressed by other incomes, which rose to Rs.428 million from Rs.64 million from a year ago and interest, which increased to Rs.253 million from Rs.98 million.
The group did not specify what these other incomes consist of in its post-earnings release to the press. The operating profit was up by only Rs.13 million to Rs.248 million.
Foreign exchange loss widened to Rs.455 million from Rs.360 million from a year earlier. SLT operates with eight subsidiaries including Mobitel Private Limited, the second largest mobile services provider in the country and the largest unit under SLT, which accounts for little under 50 percent of the group revenue.
Mobitel in September 2016 acquired 87.59 percent shares of E-channelling PLC through a voluntary offer for a consideration of Rs.641.85 million enabling to have the foothold in the growing online doctor channelling market. Meanwhile, for the year ended December 31, 2016, the group reported earnings of Rs.2.65 a share or Rs.4.8 billion, up by 30 percent. The bottom line was largely supported by the spike in other incomes and significant drop in foreign exchange losses as the operating profit fell by about a billion rupees to Rs.5.8 billion.
The foreign exchange loss for the year declined to Rs.979 million from Rs.2.1 billion in 2015. The group earnings before interest, tax, depreciation and amortization edged up one percent to Rs.20.2 billion, the company said.
“Group operating costs rose by 11.7 percent as a result of the increased government tax levies, international telecommunications levy rate by US $ 0.03 and due to the damages caused to equipment and infrastructure by floods affecting several provinces,” the company said in its earnings release. The segmental data showed the fixed telephone business profits narrowing perhaps demonstrating a phenomenon that the subscribers increasingly using voice and data services on the go through their mobile devices than through fixed telephone services.
The fixed ICT operations of the group saw its profit before tax narrowing by about Rs.152 million to Rs.2.6 billion while the same for mobile operations rose by as much as Rs.1.55 billion to Rs.4.9 billion.
Even the revenue differential showed fixed services earning a revenue of Rs.39.8 billion while the mobile operations made a revenue of Rs.33.6 billion for the year. The total group revenue grew by about Rs.5.8 billion to Rs.73.8 billion. Telecommunication services providers face an uphill task of remaining profitable due to narrowing margins and challenging operating conditions while trying to keep up with the latest technological developments through continuous investments. The sector analysts have been calling for consolidation in the industry as growth has become stilled as the players are fighting for a market that is almost static.
As at December 31, 2016, the Sri Lankan government held the majority of shares of SLT while Malaysia’s Global Telecommunications NV held a 45 percent stake.