Dialog records Rs. 22 b revenue in 1H 2011

Dialog Axiata PLC yesterday announced strong growth results for the first half of 2011, recording revenue of Rs. 22 billion and reaching the Rs. 11.1 billion mark in the second quarter.

Financial results included those of Dialog Axiata PLC and of the Dialog Axiata Group post consolidation with subsidiaries, Dialog Broadband Networks (Pvt) Ltd. and Dialog Television (Pvt) Ltd.

The Group recorded a strong growth in revenue to reach Rs. 11.1 billion in Q2 2011 and Rs. 22 billion for 1H 2011 respectively, an increase of 1% QoQ and 9% y-o-y.

Group profitability was founded on a healthy momentum in EBITDA growth with Q2 2011 EBITDA being recorded at Rs. 3.8 b, an increase of 7% QoQ. Group EBITDA for 1H 2011 was posted at Rs. 7.3 b, up 3% compared to the corresponding period in 2010. Group Net profit for Q2 2011 was posted at Rs. 1.4 b, up 19% QoQ. Net Profit for 1H 2011 was recorded at Rs. 2.5 b up 22% y-o-y.

Financial outcomes at Group level were driven by strong performance across the company and its subsidiaries. Bolstered by a circa seven million mobile subscriber base, EBITDA at company level increased by 7% QoQ to reach Rs. 3.5 b in Q2 2011. Company EBITDA for 1H 2011 however showed contraction by 4% y-o-y, due in the main to an 18% increase in operating costs.

Cost expansion is attributable in the main to revenue linked costs associated with international origination and domestic interconnection charges, and escalation in network operating costs in line with aggressive expansion of the company’s 2G and 3G infrastructure footprint.

Cost escalation year-on-year was further influenced by the impact of non-recoverable VAT expenditure, pursuant to changes in the VAT environment applicable to the telecom industry since January 2011. Company PAT grew by 18% QoQ to be recorded at Rs. 1.6 b in Q2 2011. In line with EBITDA contraction on a year-on-year basis, company PAT in 1H 2011 was recorded at Rs. 3 b, down 3% relative to the corresponding period in 2010.

Dialog Television (DTV) continued its positive performance trajectory recording revenue growth of 11% to reach Rs. 1.1 b in 1H 2011. During the same period DTV EBITDA grew to Rs. 259 m, an improvement of 382% y-o-y. DTH Pay Television subscribers increased by 16% relative to Q2 2010, reaching a total of 184,000.

Dialog Broadband Networks encompassing Dialog’s fixed telecommunications business continued to consolidate performance trends of the previous quarters, to record its fifth successive quarter of positive EBITDA in Q2 2011 to be recorded at Rs. 158 m, a 9% increase QoQ.

EBITDA for 1H 2011 was recorded at Rs. 303 m compared to a negative EBITDA of Rs. 10 m in the corresponding period in 2010. DBN however remained PAT negative in Q2 2011 on the backdrop of the accelerated amortisation of its CDMA and WiMAX networks.

Group capital expenditure in 1H 2011 amounted to Rs. 5.5 b. Capital expenditure was directed in the main towards strategic investments in high speed mobile broadband and optical fibre network expansion projects and towards providing unparalleled data speeds and connectivity, further consolidating the company’s coverage and quality leadership position.

Dialog’s network infrastructure surpassed the dual milestones of 2,000 GSM and 1,000 3G base stations during 1H 2011. The Group continued to record positive free cash flows for the sixth consecutive quarter, with Q2 2011 FCF being recorded at Rs. 0.8 b. In line with the generation of healthy free cash flow, the Dialog Group continued to maintain a structurally strong balance sheet with the Group’s net debt to EBITDA ratio improving from 1.7x as at 30 June 2010 to 1.3x at the end of Q2 2011.