Sri Lanka Telecom Group revenue grows by over 3% in third quarter
The Morning: The Sri Lanka Telecom (SLT) Group released its financial results for the third quarter ending 30 September 2023, presenting moderate growth with consolidated revenue for the quarter increased by 3.9% to Rs. 27.7 billion, compared to Rs. 26.7 billion in Q3 2022.
SLT PLC revenue growth was driven mainly by growth in broadband, PEOTV and enterprise revenue streams. During the 3rd quarter, Mobitel regained its growth after several quarters of decline and revenue began to increase in Q3 with a 3% growth over Q2.
SLT PLC reported a revenue of Rs. 17,490 million with a growth of 3.7%, while Mobitel recorded 2.7% de-growth during Q3 2023 compared to Q3 2022.
Sri Lanka Telecom CEO Janaka R. Abeysinghe said: “The third quarter of 2023 continued to be challenging for SLT Group due to the country’s economic conditions. However, through concerted efforts to optimize operations and carefully managed costs, SLT and Mobitel have been able to arrest further deterioration of the situation compared to the previous quarters, which appears to be stabilizing. Our persistent focus on delivering high-quality telecommunication services and arresting the high churn seen earlier has provided positive results. As a Group, we remain fully committed to overcoming the current challenges and providing seamless connectivity to all Sri Lankans.”
Compared to Q3 2022, SLT Group’s operational expenditure (Opex) increased by 13.3% in Q3 2023 to Rs. 19.7 billion. The major causes of SLT’s rising Opex are increased costs related to electricity, repair and maintenance. Despite the growth in revenue that was recorded, SLT was unable to match the increase in costs which has impacted SLT’s profitability.
For the nine months ending September 2023, SLT Group’s Opex was Rs. 57 billion, a 14.9% increase from Rs. 49.6 billion in the same period last year. Cost surges are attributed to economic conditions such as higher electricity tariffs, rupee’s devaluation against USD, and import restrictions.
The SLT Group’s financial performance in Q3 2023 was significantly impacted by a steep decline in the profitability of its subsidiary, Mobitel. Group EBITDA decreased by 13.7% compared to the corresponding quarter in the previous year, primarily due to a decrease in Mobitel EBITDA. The drop in revenue and increase in Opex, have led the Mobitel EBITDA to decrease during Q3 2023. Accordingly, Group Operating Profit also dropped by 81% during the quarter. Group PAT decreased by 208% mainly due to the operating loss in Mobitel as well as an increase in the finance cost of SLT PLC.
However, Mobitel’s profitability has improved notably in Q3 2023 compared to Q2 2023 as Mobitel records an increase in EBITDA by 36%, EBIT by 93% and NPAT by 44% due to the growth in revenue and optimization of business parameters. Tighter cost controls and revenue growth initiatives at Mobitel, along with lower finance costs, will be critical to restoring the Group’s profit trajectory going forward.
OSL take:
The growth in revenue recorded by SLT while indicating the strength, resilience and growth of Sri Lankan businesses amidst challenging economic conditions, but also the growing business opportunities in Sri Lanka’s ICT and digital infrastructure development sectors. With Sri Lanka on a growth path working towards becoming an emerging business destination in the South Asian region, the need for enhanced e-economy with digitalization taking center stage, there’s a host of business/investment opportunities in Sri Lanka’s ICT and digital infrastructure development sectors. The growth and profits recorded by businesses already engaged in these sectors in Sri Lanka are further indications of the growth and business potential in the ICT and digital infrastructure development sectors. Foreign businesses/investors could therefore confidently explore the expanding opportunities in the ICT and digital infrastructure development sectors. Foreign businesses could also look at forming partnerships or joint ventures with local businesses engaged in these sectors with the aim of further expansion
| Article Code : | VBS/AT/20231121/Z_8 |