Dialog ready for Airtel

While industry analysts say Dialog Telekom needs to pull up their socks in the face of a seven percent decline in profits in its third quarter with Bharti Airtel entering the market, company officials remain unfazed.

“The group profits are down by 7 % to Rs. 2.4 billion and the cumulative profits for the 9 months decreased by 3% to Rs. 7.3 billion. Dialog TV (DTV) is one reason for this decline, because Dialog lost Rs.500 million on DTV,” an industry analyst noted adding that DTV is not catching up as expected.

Nushad Perera, CEO, DTV refuted this, saying that the company is only nine months old and already has a 45,000 subscriber base. “We are building capacity now and we will do so in order to be in a better position in the market,” he said.

“The profits are down mainly because subsidiaries such as DTV is draining the money and Dialog has not got the number of subscriber base they were hoping,” a stockbroker noted.

However some industry analysts say that there is still some good prospects in the cable sector. “Around 80 to 90 percent families in Sri Lanka have televisions. Out of this about one percent has cable TV. Therefore this sector is under penetrated. There are good prospects in this sector, but it has not taken off yet,” an analyst said. A stock market analyst said that the competition for Dialog is increasing and their margins are decreasing per subscriber.

Due to the company tapping the lower end of the market. “Bharti Airtel has not even come as yet and when they do there will be a market change and competition will be doubled, if not trebled, because Bharti will compete on pricing. They will launch aggressive pricing campaigns,” he pointed out.

However, Perera was unfazed by this. “We are more concerned about the third and the fourth player rather than the fifth,” he said, adding that Dialog has different pricing strategies as well.

The mobile sector is getting matured, because the revenue derived from a single subscriber is reducing resulting in marginal; revenue decline.

“The company has already penetrated the high income sector and now they are targeting the lower income sector. The telco market is becoming saturated and will get worse when Bharti Airtel comes in. The customers are the real winners, but the industry will lose,” he added.