Dialog 4Q revenue languishes on weak mobile revenue, profits surge on currency

Dialog Axiata PLC saw its top line languishing during the three months to December 2019, from lower revenues from its key mobile business but the fixed broadband and satellite television businesses buffered the top line.  

The telco recorded Rs.29.7 billion in revenues for the October-December quarter (4Q19), up 4.2 percent from the same period in 2018. 

In December, the government reduced the Value-Added Tax (VAT) to 8 percent and removed the Nation Building Tax (NBT), bringing down the telecommunication bills and giving an incentive for higher use of voice and data services. 

The revenue from the mobile operation for the quarter came down to Rs.20.5 billion, from Rs.21.4 billion in the year earlier period. The revenue for the full financial year (FY19) was Rs.82.1 billion, compared to Rs.86.5 billion (FY18).

Dialog Axiata’s mobile operation includes both voice and data but the company was less specific on which section underperformed.  

Data is fast overtaking the use of voice for daily communication needs. 

As a result, local telcos have been offering attractive pre-paid and post-paid packages at very affordable prices, bundled with free voice, SMS and data, in a bid to lure in more subscribers to their networks. 

After the price floors were lifted, the telcos were seen bottom pricing to entice subscribers from other networks. 

Meanwhile, for the quarter under review, the group reported an operating profit of Rs.3.6 billion, slightly up from Rs.3.5 billion a year ago. 

For the three months, the group reported earnings of 30 cents a share on total profit of Rs.2.4 billion, compared to the earnings of one cent a share or Rs.92 million profit in the same three months in FY18. 

The surge in the bottom line came from the absence of a nearly Rs.2.4 billion in exchange translation losses booked in 2018, on account of Dialog Axiata’s sizable foreign currency borrowings. 

The company proposed a dividend of 53 cents a share for the year. 

For the year ended December 31, 2019, Dialog Axiata reported earnings of Rs.1.32 a share or Rs.10.8 billion in total earnings, compared to earnings of 92 cents or Rs.7.5 billion in 2018.
The revenue for the year grew by 7 percent to Rs.116.8 billion, largely coming from the fixed telecommunication and broadband business and partly by the group’s television business. 
The two segments brought in revenue of Rs.25.9 billion and Rs.8.7 billion, respectively, compared to  Rs.15.2 billion and 
Rs.7.5 billion in 2018. 

“On the back of the strong cost management focus, Dialog Television earnings before interest tax, depreciation and amortisation (EBITDA), recorded a growth of 31 percent to reach Rs.2.4 billion for 2019. 

Accordingly, the net loss declined to Rs.541 million for 2019, relative to a net loss of Rs.915 million in 2018,” a statement from the company said. 

Meanwhile, the net profit of Dialog Broadband Network declined to Rs.411 million in FY19, from Rs.1.3 billion in FY18, barring the one-off gain. 

Despite the dip in the revenues, the mobile operations made a net profit of Rs.11.6 billion, compared to Rs.4.4 billion in 2018, partly associated with the exchange translation losses occurred in that year. 

The group invested Rs.28.6 billion in FY19 as capital expenditure. 

Malaysian parent Axiata Investments (Labuan) Limited holds a 83.32 percent stake in Dialog Axiata while the state-controlled private sector pensions fund, the Employees’ Provident Fund, has 2.92 percent in the firm, as the second biggest shareholder.