Dialog consolidates performance with strong 3rd quarter

Dialog Axiata PLC announced, Tuesday 7th November 2017, its consolidated financial results for the nine months ended 30th September 2017. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”) post-consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd (“DBN”), Dialog Television (Pvt) Ltd (“DTV”) and Digital Holdings Lanka (Pvt) Ltd (“DHL”). Following the acquisition of Colombo Trust Finance PLC on 12th September 2017, the assets and liabilities of Colombo Trust Finance have been reflected in the consolidated balance sheet of the Group. The Group continued its strong growth momentum across Mobile and Fixed Line businesses to record a consolidated revenue of Rs24.2Bn for Q3 2017 and Rs69.4Bn for the nine months ended 30th September 2017, demonstrating a growth of 5% Quarter on Quarter (“QoQ”) and 8% Year to Date (“YTD”) respectively. Downstream of revenue, Group EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) recorded a growth of 16% QoQ and 14% YTD to reach Rs9.4Bn for Q3 2017 and Rs24.8Bn for the first nine months of 2017 on the back of strong recovery in core revenues and cost initiatives. The Group EBITDA margin was accordingly recorded at 35.

7%, improvement of 1.6pp YTD. The quarter featured the removal of 10% Telco Levy for Mobile and Fixed data services, with effect from 1st September 2017. The effective indirect tax on data services reduced from 31.

7% to 19.7% and in line with this reduction, all licensed telecommunications operators extended a further 10% data bonus in support of Governments directive to lower taxes. Group NPAT (Net Profit After Tax) grew 59% QoQ to be recorded at Rs3.7Bn. However, NPAT for the first nine months of 2017 declined by 2% to be recorded at Rs7.6Bn, impacted by increase in depreciation, net finance cost and non-cash translational forex losses. The Sri Lankan Rupee depreciated 2.2% YTD resulting in a non-cash translational foreign exchange loss of Rs0.4Bn compared to Rs0.2Bn during the corresponding period in 2016. Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs27.9Bn to the Government of Sri Lanka (GoSL) during the first nine months of 2017 representing an increase of 18% relative to same period of 2016. Total remittances included direct taxes and levies (Rs7.

4Bn) as well as consumption taxes collected on behalf of the GoSL (Rs20.5Bn). During the quarter, Dialog Axiata PLC completed the acquisition of an 80.34% stake in Colombo Trust Finance PLC (CTF). The Company proceeded with a mandatory offer for the remaining 19.66% of shares, and the offer was concluded on 2nd November 2017. The acquisition of CTF by Dialog Axiata PLC will facilitate the expansion of the scope of operations of the Dialog Group in to the sphere of mainstream Financial Services. Dialog aims to bring together the realms of advanced digital connectivity and cutting edge Financial Technology (FinTech) to deliver a revolutionary suite of products and services which will expand the vistas of financial inclusion in Sri Lanka. Group capital expenditure for the nine months ended 30th September 2017 totalled to Rs17.1Bn. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Group Operating Free Cash Flow (OFCF) was recorded at Rs3.1Bn for the first nine months of 2017. The Group continued to exhibit a structurally strong balance sheet with the Net Debt to EBITDA ratio being maintained at 0.89x as at 30th September 2017. At an entity level, Dialog Axiata PLC (“the Company”) continued to contribute a major share of Group Revenue (83%) and Group EBITDA (79%). The Company Revenue for the nine months ended 30th September 2017 was recorded at Rs57.4Bn, up 6% compared to the corresponding period in 2016. Revenue for 3Q 2017 grew by 5% QoQ to be recorded at Rs20.1Bn. Underpinned by strong revenue performance, the Company EBITDA for the quarter increased by 14% QoQ for Q3 2017 to reach Rs7.4Bn. On a YTD basis, the Company EBITDA for the first nine months of 2017 grew by 4% to be recorded at Rs19.6Bn, translating to an EBITDA margin of 34.1%. The Company NPAT was recorded at Rs3.3Bn for Q3 2017 and Rs7.4Bn for the first nine months of 2017 respectively, representing an increase of 41% QoQ and a decline of 12% YTD. Dialog Television (DTV), continued to consolidate its leadership position in the Digital Pay Television space with the subscriber base growing 17% YTD to exceed 926,000 as at end September 2017. The revenue grew 6% QoQ in Q3 2017 to reach Rs1.6Bn and 1% on YTD basis to be recorded at Rs4.6Bn for the nine months ended 30th September 2017. Driven by aggressive cost initiatives, DTV EBITDA grew by 84% QoQ to reach Rs202Mn for Q3 2017 whilst on a YTD basis EBITDA grew 22% to be recorded at Rs377Mn. Downstream of positive EBITDA performance, DTV Net Loss decreased 51% QoQ albeit the Net Loss for nine months ended 30th September 2017 increased to Rs634Mn relative to a Net Loss of Rs346Mn recorded in the corresponding period of 2016. Dialog Broadband Networks (DBN) recorded a Revenue of Rs3.2Bn for Q3 2017 and Rs9.1Bn for nine months ended 30th September 2017, representing an increase of 4% QoQ and 35% YTD. Strong top line growth was supported by Fixed Home Broadband segment powered by 4.5G LTE Technology. The quarter also featured the launch of a pre-paid offering for Fixed Home Broadband with a view to expand affordability and to reach a wide spectrum of Sri Lankan Households. Downstream of resilient revenue performance, DBN EBITDA grew 16% QoQ and 84% YTD to be recorded at Rs1.9Bn for Q3 2017 and Rs5.1Bn for the first nine months of 2017 respectively. On the back of healthy EBITDA performance, DBN recorded a Net Profit of Rs640Mn for Q3 2017 up 93% QoQ and Rs1.2Bn for nine months ended 30th September 2017 relative to a Net Loss of Rs62Mn in the corresponding period of 2016. (Media Release)