Dialog rings steady results

Dialog Axiata PLC yesterday announced its consolidated financial results for the nine months ended 30 September 2011. Financial results included those of Dialog Axiata PLC and of the Dialog Axiata Group post consolidation with subsidiaries Dialog Broadband Networks (Pvt.) Ltd (DBN) and Dialog Television (Pvt.) Ltd (DTV).

The Group recorded strong revenue growth across all segments to reach Rs. 11.6 billion for the third quarter. Group revenue for the nine months ending 30 September 2011 was recorded at Rs. 33.7 billion, delivering growth of 5% QoQ and 10% YoY.

Revenue growth in combine with effective cost management lead to the Group posting a healthy growth in EBITDA with Q3 2011 EBITDA being recorded at Rs. 4.3 billion, inclusive of the recognition of Rs. 342 million pertaining to Telecommunication Development Fund refunds from the TRCSL accordingly, EBITDA increased 14% QoQ.

The Group EBITDA margin grew by two percentage points on a QoQ comparison to reach 37% for the third quarter. Group EBITDA for the first nine months of 2011 was recorded at Rs. 11.7billion up 5% compared to the corresponding period in 2010 featuring an YTD EBITDA margin of 35%. Group net profit for Q3 2011 was posted at Rs. 1.4 billion, up 1% QoQ. Net profit for the first nine months of 2011 was recorded at Rs. 3.9 billion, up by 4% YoY.

The positive performance trajectory at Group level was underpinned by robust growth in the Group’s core mobile business as reflected in the financial performance of the Company.

On the strength of a seven million strong mobile subscriber base, Company revenue grew by 5% QoQ to reach Rs. 10.7 billion. Company revenue for the nine months ending 30 September was recorded at Rs. 30.9 billion, up 10% relative to the corresponding period in 2010.Company costs grew by 16% YoY. Cost expansion at company level 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 the aggressive expansion of the Company’s 2G and 3G infrastructure footprint. Cost escalation YTD was further influenced by the impact of non-recoverable VAT expenditure, in light of changes in the VAT environment applicable to the telecom industry since January 2011.

Notwithstanding revenue linked cost expansion, EBITDA at company level increased by 15% QoQ (inclusive of the recognition of TDF refunds) to reach Rs. 4.1 billion in Q3 2011.The Company’s EBITDA margin improved by three percentage points QoQ, to reach 38%. Company EBITDA was recorded at Rs. 10.9 billion for the first nine months of 2011 and featured an EBITDA margin of 35% YTD.

On the backdrop of robust EBITDA performance in the third quarter, Company PAT grew by 3% QoQ to be recorded at Rs. 1.7 billion in Q3 2011. On a YoY basis, flat EBITDA performance in combine with increased depreciation charges, lead to YTD NPAT (recorded at Rs. 4.6 billion), exhibiting negative growth of 7% relative to the corresponding period in 2010.

Dialog Television (DTV) continued its positive growth momentum recording YoY revenue growth of 13% to reach Rs. 1.7 billion for the first nine months of 2011. EBITDA for Q3 2011 was posted at Rs. 118 million and Rs. 377 million for the first nine months of 2011.

On a YoY comparison, DTV EBITDA improved 182% relative to the corresponding period in 2010. The DTH Pay Television subscriber base increased by 32% relative to the corresponding period in 2010 to surpass the 200,000 subscriber milestone during the third quarter.

Dialog Broadband Networks, featuring Dialog’s fixed telecommunications business continued to consolidate performance trends of the previous quarters, to record its sixth successive quarter of positive EBITDA in Q3 2011.

DBN EBITDA was recorded at Rs. 154 million, a 3% decrease on a QoQ basis. EBITDA for the first nine months of 2011 however exhibited positive growth with YTD EBITDA growing 175% YoY to be recorded at Rs. 456 million. DBN remained PAT dilutive in Q3 2011 on the backdrop of the application of aggressive depreciation charges accruing from the accelerated amortisation of its CDMA and WiMAX networks.

The Group continued to make aggressive investments in consolidating its leadership in terms of nationwide ICT infrastructure footprint and the application of cutting edge technology across its mobile, fixed and broadband businesses. Group Capital expenditure for the nine months ending 30 September 2011 was recorded at Rs. 6.7 billion. Capital expenditure was directed in the main towards strategic investments in high speed mobile broadband and Optical Fibre Network (OFN) expansion projects.

On the backdrop of robust EBITDA performance, the Group continued to record positive Free Cash Flows (FCF) for the seventh consecutive quarter, with Q3 2011 FCF being recorded at Rs. 3.2 billion. In line with the generation of healthy free cash flows, the Dialog Group continued to maintain a structurally strong balance sheet with the Group’s net debt to EBITDA ratio improving from 1.5x as at 30 September 2010 to 0.99x as at the end of Q3 2011.