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Sri Lanka’s Dialog Axiata profits wiped out in kitchen sink quarter

ECONOMYNEXT – Sri Lanka’s Dialog Axiata Plc reported losses of 2.5 billion rupees at company level and was barely in the black at group level as the firm threw in write-downs on top of forex losses and a write-back into the December 2018 quarter.

The group reported earnings of 01 cent for the quarter, down from 39 cents a year earlier. For the year to December 2018, the group reported earnings of 92 cents per share, on total profits of 7.56 billion rupees, down from 11.04 billion a year earlier.

The stock closed at 9.90 rupees on February 15.

The firm has operations in mobile. fixed wireless, and pay TV.

In the quarter, revenues grew 14.9 percent from a year earlier to 28.5 billion rupees, and operating costs grew 29 percent to 15.87 billion rupees, while gross profits grew at a slower 2.9 percent to 12.6 billion rupees.

Administration costs doubled to 9.0 billion rupees to 4.4 billion rupees.

The firm said it wrote off costs of "digitalization of business activities" to "fully leverage on capabilities of digital platforms and technologies," which it started in 2017, during the last quarter of the year.

The write-off was taken as forex losses soared in the quarter when Sri Lanka’s soft-peg with the US dollar failed and the rupee tumbled in 2018 once again.

Finance costs rose to 2.9 billion rupees in the quarter from 530 million rupees a year earlier.

The ‘kitchen sink’ quarter will help the group start the next financial year without being dragged down by past events, analysts say.

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The firm also wrote back 3.6 billion rupees as Sri Lanka’s Supreme Court reversed a lower court order made against Suntel, a fixed wireless firm that Dialog acquired in the past.

Dialog said the group paid 8.5 billion rupees in direct taxes and levies and 25.6 billion rupees in turnover taxes to the state in 2018 on total revenues of 109 billion rupees. (Colombo/Feb18/2019- SB)
 

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