In worse than expected results, Dialog Telekom PLC Group recorded a substantial net loss in the first half of 2009 with the company’s financial statements showing rising administrative, distribution and finance costs as well as operating losses.
The Group’s net loss for the six months ended June 30, 2009 was Rs. 9.5 billion compared to a net profit of Rs.1.2 billion for the corresponding period in 2008. Stock brokers said this is the probably the highest loss ever recorded for the period of any company.
“Nobody was expecting good news from Dialog but these results are worst than expected,” one broker said. Brokers added that mobile penetration in Sri Lanka is high at around 60% and that Dialog is the market leader but due to intense and cut throat price competition between the five mobile service providers, Dialog has been unable to dictate prices.
The company said revenue also decreased for the current period to Rs.17.1 billion from Rs.18 billion the previous year. Dialog announced to the Colombo Stock Exchange (CSE) this week that the Board of Directors resolved to undertake a one-off network modernization step aimed at converting its Core Network to 100% Next Generation Network (NGN) formulation.
The one-off modernization is expected to deliver Rs.1.5 billion to its profit and loss (P&L) on an annualized basis going forward. Dialog said modernizing specific elements of the Core Network requires a provision for impairment of legacy network elements. Accordingly, the company has provided for an immediate impairment charge amounting to Rs. 6,031,620,039 in the quarter ended 30 June 2009.
Stock brokers said the loss recorded by Dialog is partly due to this fixed asset Rs.6 billion write-off although even without the write-off, the company would still have made a huge loss for the period. However, one broker said it was not exactly clear what the write off was. |
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