Social media block, data rivalry cuts Sri Lanka’s Dialog Axiata June quarter profit

ECONOMYNEXT – June quarter net profit at Sri Lanka’s Dialog Axiata fell 29 percent to almost two billion rupees from a year ago as sales and earnings were hit by social media blocks after April’s suicide bombings and data price competition.

The group had earnings of 24 cents a share for the quarter, according to interim results filed with the stock exchange.

Quarterly sales rose nine percent to 29 billion rupees

Dialog Axiata said June 2019 quarter net profit was down 59 percent from the previous quarter.

In the six months to 30 June 2019, EPS was 84 cents with net profit down 21 percent to 6.9 billion rupees and sales up 10 percent to 58 billion rupees.

The stock was trading at 10.80 rupees mid-morning Thursday, down 10 cents or almost one percent.

“The second quarter was marked by externalities such as Easter Sunday incidents including social media blockage and business slowdown which impacted both revenue and profitability,” Dialog Axiata said in a statement.

Suicide bombings of hotels and churches by Islamist extremists killed more than 250 people in April with violence against minority Muslims later on promoting government blocking of social media used to spread hate speech.

Dialog Axiata also said “aggressive competition and data re-pricing” towards the end of the first quarter of 2019 also aggravated the impact of the violence.

“Consequently, the group revenue remained flat on a quarter-on-quarter (QoQ) basis to record at 29.1 billion rupees for Q2 2019.

“EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined nine percent QoQ to record at 11.0 billion rupees for Q2 2019 amid muted revenue growth and escalation in costs. On a year-on-year basis, revenue and EBITDA grew 9 percent and 5 percent respectively.”

Dialog Axiata said the group’s capital expenditure for the first half of 2019 was 8.7 billion rupees, with spending mainly on investments in high-speed broadband infrastructure.
(COLOMBO, 08 August 2019)