Sri Lanka Telecom annual loss Rs 3.9bn, mobile business in the red
Sri Lanka Telecom Plc., which is to be offloaded by the Government of Sri Lanka, has reported a net loss of Rs 3.92 billion for the group in 2023, compared with Rs 4.76bn profit the year before.
Last year, Sri Lanka offered to sell 50.23% held by the Treasury (the Government) in the company, igniting widespread opposition stemming from its strategic importance to national security and the economy, particularly the banking, and mobile and internet banking sectors.
The potential divestment is in a legal tangle as well, initiated by two bidders. SLT itself had filed suit to prevent the merger of two rivals, but backed off.
SLT is the market leader in fixedvoice and broadband services and is deemed the second-biggest player in mobile.
The company also has a large portfolio of lands, 74 of which are valued at Rs 43.31bn in 2022. SLT owns 478 lands.
In 2023, group revenue fell to Rs 106.41bn from Rs 107.71bn the year before.
Group loss for the final quarter of 2023 was Rs 1.21bn compared with a loss of Rs 1.28bn in the comparable quarter of 2022. Revenue dropped to Rs 25.97bn from Rs 28.09bn in the same period of 2022, lower by 7.5%.
For 2023, SLT’s fixed ICT operations booked a pre-tax loss of Rs 1.61bn versus Rs 12.62bn profit for 2022. Mobile operations reported a loss of Rs 1.82bn from Rs 1.50bn profit in 2022. The Internet Protocol TV business (PeoTV) reported profit of Rs 692 million from a loss of Rs 1.79bn in 2022.
A statement noted: “… SLT and Mobitel individually reported losses of Rs 1.1bn and Rs 3.6bn for the year, respectively.’’
The basic loss per share was Rs 2.17 for 2023.
Sri Lanka Telecom’s top 10 shareholders are — the Secretary to the Treasury 50.23%, Global Telecommunications Holdings NV 44.98%, Employees Provident Fund 1.40%, Sri Lanka Insurance Corporation Ltd-Life Fund 0.98%, Bank of Ceylon A/C Ceybank Unit Trust 0.48%, Employees Trust Fund Board 0.18%, Sri Lanka Insurance Corporation Ltd-General Fund 0.11%, Seylan Bank PLC / Karagoda Loku Gamage Udayananda 0.10%, Bank of Ceylon A/C Ceybank Century Growth Fund 0.04%, and Peoples Leasing & Finance PLC / Mrs. M. E Amarasinghe 0.04%.
The Incorporated Trustees of the Church of Ceylon is also a shareholder with 223,590 shares, or 0.01%
Sri Lanka Telecom provides fixed ICT operations (such as voice, data, IPTV, and cloud) mobile services (such as mobile telecommunication, broadband, and mobile money), and other operations such as healthcare channelling (eChannelling Plc is separately-listed), and education services, data analytics and AI solutions, and software solutions, as well as submarine cable maintenance.
In 2022, group profit sank by 60.82% to Rs 4.8bn from Rs 12.16bn the year before. Group revenue increased by 5.2% from the year before to Rs 107.7bn, although mobile revenue, which accounted for more than 40% of group revenue, fell to Rs 43.49bn from Rs 45.57bn in 2021, down by 4.6%. The number of mobile customers leaving increased and subscribers dropped.
In September that year, the regulator revised tariffs for mobile, fixed, broadband, and other services by 20%.
Global Telecommunications Holdings NV., holds 44.98% of SLT shares. It is the holding company of Malaysian telco Maxis Berhad. For the fourth quarter ended 31 December 2023, Maxis posted 56m ringgit profit. Ananda Krishnan, 85, whose net worth is estimated by Forbes at US$4.9bn is a substantial shareholder of the company.
In April 2008, in the single largest deal (US$297 million) on the Colombo Stock Exchange, Ananda Krishnan’s Usaha Tegas Sdn Bhd, which controls Maxis Communications, purchased Sri Lanka Telecom shares for Rs 50.50 (US$0.47) each through its subsidiary, Global Telecommunications Holdings. The stake was purchased from Japan's Nippon Telegraph and Telephone Corporation, which offloaded its 35.2% shareholding in Sri Lanka Telecom. A long legal tussle preceded the transaction. The Supreme Court approved the deal. By April 21, SLT shares had rocketed to a high of Rs 49.75 from about Rs. 30 earlier in the year. It fell later.
NTT had purchased 35% (631.701m ordinary shares) of SLT from the Government on 5 August 1997. The Government sold a further 3.5% to SLT employees. Then, in November 2002, the Government sold another 12% through a listing on the stock exchange and pared its holding to 49.5%.
In 2022, SLT listed 72 selected lands it owned. Among them, the regional telecom engineers' office, exchange and IPT quarters land of 0.2354 hectares in Nuwara-Eliya was valued at Rs 931 million. Another site, the regional telecom engineer’s office land at Senanayake Mawatha in Bandarawela of 0.2380 hectares was valued at Rs 400m.
SLT’s dividend payable to the Government in 2022 was Rs 244m.
Since 2019, SLT’s return on equity (profit in relation to value of equity) has fluctuated from 8.09% to 9.35% (2020), 12.94 (2021), and 5.15% (2022).
Dividend per share has fluctuated from Rs 1.06 in 2019 to Rs 1.49 (2020), Rs 2.02 (2021), to 25 cents in 2022.
Interest expenses and finance cost of the group have risen to Rs 11.29bn in 2023, from Rs 4.89bn in 2022.
The potential divestment is in a legal tangle as well, initiated by two bidders. SLT itself had filed suit to prevent the merger of two rivals, but backed off.