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Dialog Axiata traffic surge 40-pct in Sri Lanka Covid-19 curfews, but revenue hit on discounts

ECONOMYNEXT – Dialog Axiata, Sri Lanka’s largest mobile operator, which has fixed access and pay television had seen a surge in traffic but expects revenue to fall as much as 10 percent amid discounts while the bottom line may also be hit by currency depreciation, an official said.

Traffic surged around 30 to 40 percent sending the group scrambling to maintain quality and keep the network running, Group Chief Executive Supun Weerasinghe said.

“This created a massive challenge… to keep everyone connected and maintain service,” Weerasinghe told an online forum by Sri Lanka’s Echelon Magazine.

“But fortunately this traffic change happened during daytime. Our network is designed for a night peak. It helped smoothen the load.”

Dialog sees peak usage during 1830h to 2300h he said. But the firm still had to augment services to keep the network running as loads shifted from fixed business customers to retail mobile.

Dialog then had to keep the network and quality up despite the limited spectrum.

Weerasinghe said group gets about 60-65 percent of revenue from mobile, 11 percent from fixed 7 percent from television and 13 percent from international.

The first priority to help customers keep connected during curfews with prepaid customers finding it difficult to pay.

Dialog had then started to give credit and discounted bundles, to help customers keep connected.

Discounts are given to curfews areas and to the whole island when curfews are extended. About a million discounted bundles had been activated so far, Weerasinghe said.

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Dialog has also opened up its television channels to customers for a month during curfew costing about 200 million rupees.

Though traffic has surged the discounts may see total revenues fall up to 10 percent during the year, he said.

“The general industry-wide projection is that there would be a zero to 10 percent fall in revenue,” Weerasinghe said.

“When overall consumer spend is affected, as a service provider touching all segments of the population we get affected, we are not able to charge the same price.”

Weerasinghe said the firm was looking to conserve cash, re-direct some of the capital expenditure towards capacity expansion, but was paying small time suppliers.

Over the medium term Dialog saw demand for broadband. Only 30 percent of homes in the country had broadband.

“There is potential for this to be increased,” he said. “So in the online world having a good fixed and mobile broadband becomes important.”

Mobile broadband penetration was 40 to 50 percent he said. Smartphone penetration was about 55 percent.

Staff had to work on base station and also visit customers at considerable risk to themselves, he said.

Dialog was adding fourth generation capacity and also coverage.

Dialog was also had 180 million US dollars of borrowings, which would hit the bottom line when the currency falls.

The rupee had already fallen by about 10 rupees since the central bank started to cut rates in on January 30 and then started to print money in a series of helicopter drops, despite operating a soft-pegged exchange rate.

As the external sector deteriorated amid money printing, the country’s credit rating was downgraded to ‘B-‘ by Fitch and spreads on sovereign bonds spiked. (Colombo/May01/2020)