COLOMBO, Nov 11 (Reuters) - Sri Lanka's largest mobile phone
operator, Dialog Telekom DIAL.CM, posted its fifth straight
quarterly net loss for the third quarter, confounding analysts'
expectations that it would break even.
The company, a unit of Malaysia's Axiata (AXIA.KL), said on
Monday it lost 438.9 million Sri Lankan rupees ($3.83 million)
in the quarter ended Sept. 30, as profit remained elusive at its
broadband and TV operations and margins were squeezed by fierce
competition.
This compared to a loss of 192.5 million rupees in the same
period last year.
"It is in the path of recovery, though we expected a
breakeven this quarter," Danushka Samarasinghe, head of research
at Asia Securities, told Reuters. "Dialog's TV and broadband
business are still running at a loss without breaking even."
January-September group net loss hit 9.97 billion rupees,
compared to a 1.03 billion rupee net profit in the same period a
year ago. Overall group turnover for the period edged down 4.7
percent to 26.2 billion rupees.
Nine-monthly losses at Dialog's broadband and TV operations
fell slightly to 513.5 million rupees from 571.5 million.
The company's shares, which make up 5.86 percent or 55
billion rupees ($480.6 million) of the market capitalisation as
of Wednesday, ended flat at 6.75 rupees, before the release.
The company said its cost-cutting had helped it reduce
operating costs by 1 percent compared to the previous quarter.
But analysts said cost reduction alone would not help the
telecoms firm to reverse its loss-making trend.
"Sri Lanka's telecoms industry is faced with stiff
competition with squeezed profit margin," said Channa
Amaratunge, director at CT Capital. "The revenues are coming
down due to high competition in mobile phone services."
Five mobile phone service providers operate in Sri Lanka
with a 20 million population and over 60 percent mobile
penetration.
Last month, Fitch Ratings in a statement said the entry of
Emirates Telecommunications Corporation (ETEL.AD), which bought
the Sri Lanka business of Millicom International Cellular SA
(MICC.O), could further delay any prospects for recovery in Sri
Lankan telecom operators' profitability. [ID:nWLA6005]
Shares in Dialog Telekom hit a life-time low of 4.50 rupees
on March 5, on continuous losses since the third quarter of
2008.
Last year, Dialog cut tariffs and introduced low-cost mobile
phone packages to encourage customers to talk more amid high
inflation and declining consumer spending power.
With more than 6.3 million subscribers, Dialog still has the
largest share of Sri Lanka's slowing mobile market.
As well as Emirates, which is yet to start operations,
rivals include Sri Lanka Telecom Ltd.'s SLTL.CM Mobitel,
Hutchison Telecommunications International Ltd. (2332.HK) and
Bharti Airtel (BRTI.NS).
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