Dialog net earnings rise; 25% state tax still a concern

Despite many representations to eliminate or reduce the new costs imposed by the Sri Lankan Government, Dialog Axiata PLC stands as a company which will be imposed a 25 per cent additional one-off tax, as per the interim budget 2015, analysts say.

"This tax will be slapped on the profits of the groups which have earned in excess of Rs.2 billion for 2013/2014. Despite many representations by the telco industry, companies haven't made progress in reducing/getting exempted. Dialog as such is likely to incur a tax of some Rs.1.5 billion, based on conservative estimates," an analyst said. Also, according to industry analysts, there would be one-off levy of Rs.250 million to be imposed on licensed mobile operators and also a one-off levy of Rs.1 billion would be imposed on direct to home satellite operators. "In addition mobile operators would also be required to bear the 25 per cent reload charges (prepaid) on behalf of clients.”

Reporting its consolidated financial results for the six months ended 30th June 2015, the group said it continued its growth momentum across Mobile, Digital Pay Television, Tele Infrastructure and Fixed Line businesses to record consolidated revenue of Rs. 35.1 billion for 1H 2015 demonstrating a growth of 6 per cent year to date.

"Group revenue grew 2 per cent quarter on quarter to be recorded at Rs. 17.7 billion for Q2 2015. The second quarter of 2015 featured the impact of the industry-wide introduction of a 25 per cent Bonus on Mobile Prepaid Domestic Calls with effect from 7h April 2015.” It said that the Group EBITDA for 1H 2015 grew by 20 per cent year to date to reach Rs. 11.9 billion.

Despite the new taxes, mobile revenue grew by some 6 per cent in the year to 2Q2015 largely due to the 61 per cent growth in the data segment, according to the released results. Dialog’s mobile subscriber base stood at 10.1 million as at end of June 2015, growing at 8.7 per cent YoY during the quarter. Further the TV segment saw a revenue growth of nearly 15 per cent YoY during the quarter under review on the back of strong subscriber growth, the results showed.