Dialog confident of the economy

Dialog Telekom Ltd, the cellular giant, is confident of the Sri Lankan economy and convinced about the company’s growth prospects this year.

“We have been through much worse, but we are resilient,” Dr. Hans Wijayasuriya, CEO, Dialog Telecom told The Sunday Times FT in an interview this week.

He said the company, which is in a growth industry, is much more resilient and will maintain its growth momentum. “I am not overly concerned that the economy will crash, but business is becoming much more difficult. However, it does not mean that there is a slowdown,” he explained. The company’s services in Jaffna have been discontinued for security reasons (since several months back) but Dr. Wijayasuriya assured that this is only a temporary phase. “As soon as normalcy returns they will be resumed,” he added.

So far, the company has maintained high investor confidence, since its initial public offering (IPO) in 2004, while managing to garner a subscriber base of 2.875 million and revenue of Rs.8 billion or US$167 million as at 2005.

Dialog holds 62 percent market share in an oligopoly of four players including Celltel, Mobitel and Hutch. “The cellular industry always has fierce competition and in South Asia or South East Asia the mobile technology industry is a very interesting place to be,” Dr. Wijayasuriya added, saying that competition is healthy.

Meanwhile, Dialog has gained sustainable competitive advantage among the competitors using non price competition as the key strategic weapon such as lower call charges. Dr. Wijayasuriya said that the rising living standards and growing need for communication will drive the economy to rapidly increase its mobile penetration.

According to the Telecommunication Regulatory Commission (TRC), the total fixed and mobile subscriber base grew by 25.02 percent during the first six months of 2006 with the mobile subscribers growing by 26.25 percent to reach a total of 4,284,256 subscribers. According to stock market analysts, Dialog is further planning to strengthen its profit leadership strategies, product quality leadership strategies, market leader ship strategies and corporate leadership strategies to remain competitive.

Dialog has been consistent in building a competitive future, especially in-terms of technology. “The way forward for Dialog is to evolve and be a leader in multi-sensory connectivity,” Dr. Wijayasuriya added. He explained that the planned expansion in quadruple play capabilities in the mobile connectivity is aimed at transforming the company towards an entity which is more diversified and better geared to handle challenges in the media and communications industry. He said that the approximate investment of the company in the country is US$ 450 million since its inception and Dialog is due to invest more with expansion.

When asked whether the company’s recent acquisitions are in a bid to become a conglomerate, he said that Dialog’s recent acquisitions are not diversifications but merely moving with the technology convergence.

“We are a non diversified company, but Dialog is adapting to opportunities,” he said, adding that presently the company is not looking to acquire any entity.

He also said that Dialog’s foray into fixed lines is due to happen this year. “The CDMA network is currently under testing,” he said.

He was confident that despite being the fourth player once again, (when the company entered the industry 10-years ago they were in the fourth position) this time around the company will be successful.

Dr. Wijayasuriya commenting on the stock market situation said that overall, it has done well, but it can improve with greater free float, higher liquidity and greater market capitalisation. “There has to be more liquidity in the market,” he added.