Sustainability & National Contribution Report 2016

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Key Highlights

  • Double-digit revenue growth for the 2nd consecutive year

  • Data revenue continued to grow exponentially by 52%

  • Strong EBITDA growth of 23%

  • Commissioned Bay of Bengal Gateway (BBG) Submarine Fibre Optic Cable

  • Demonstrated South Asia's 1st 4.5G Demo

About Dialog

Dialog Axiata PLC operates Sri Lanka’s largest and fastest growing mobile telecommunications network. The Company is one of the largest listed companies on the Colombo Stock Exchange in terms of market capitalisation. Dialog is also Sri Lanka’s largest Foreign Direct Investor (FDI) with investments totalling over USD2 billion.

Dialog, a winner of six GSMA Mobile World Awards has the distinction of being voted by Sri Lankan consumers as the Telecom Service Provider of the Year for the sixth successive year as well as the Internet Service Provider of the Year at the SLIM-Nielsen People’s Choice Awards for the sixth successive year. Dialog has topped Sri Lanka’s Corporate Accountability rankings for the past six years in succession and is an ISO 9001 certified company.

Dialog has been at the forefront of innovation in the mobile industry in Sri Lanka since the late 1990s, propelling the nation’s mobile telephony infrastructure to a level of advancement on par with the developed world. The Company delivers advanced mobile telephony and high speed mobile broadband services to a subscriber base of 11.8 million Sri Lankans, via 2.5G and 3G/3.5G and 4G networks.

Dialog supplements its market leading position in the mobile telecommunications sector with a robust footprint and market presence in Sri Lanka’s Fixed Telecommunications and Digital Pay Television markets through its fully-owned subsidiaries Dialog Broadband Networks (Private) Ltd (DBN) and Dialog Television (Private) Ltd. (DTV). DBN is Sri Lanka’s second largest Fixed Telecommunications service provider, serving residential and enterprise customers with voice, broadband, lease lines and customised telecommunication services. DTV operates a Direct-to-Home (DTH) Digital Satellite Pay TV service and is the market leader in Sri Lanka’s Pay TV sector and delivers high quality infotainment to a viewer base of over 800,000 Sri Lankan households.

Business Review 2016

Dialog witnessed another year of stellar performance amidst intense competition, registering significant improvement in profitability along with operational efficiencies driven by Cost Rescaling Initiatives. The Company’s subscriber base reached 11.8 million in 2016 compared to 10.9 million in 2015, expanding its subscriber market share by 1.5pp.

While voice continues as the dominant service, mobile broadband services demonstrated robust revenue growth. This was the result of data network coverage expansions, attractive tariffs, and growing smartphone penetration driven by digitisation, increasing affordability and availability of devices, as well as the adoption of data-intensive applications, such as gaming and video streaming. Data revenue grew by a strong 52% Year on Year (YoY), while mobile broadband subscriber base grew by 41%. Smartphone adoption within Dialog’s network increased to 44% in 2016.

Dialog invested substantial capex towards increasing its 3G and 4G base stations, expanding by 12% and 71% respectively in 2016, while fixed 4G LTE sites increased by 76%.

During the year, Dialog commissioned the Ultra High Capacity 100G-PLUS Bay of Bengal Gateway (BBG) Submarine Fibre Optic Cable with an investment in excess of USD34.5 million (SLR5 billion). The BBG system represents a significant step-up in connectivity speeds which will further augment the multiplicity of global networking options for Sri Lanka's enterprise ICT sector, as well as speeding up Dialog's 3G HSPA+, 4G and fibre optic networks. Dialog also launched the country’s first Voice over LTE (VoLTE) service, enabling ultra-high quality voice and video calls over its 4G LTE networks. Within its digital services segment, Digital Health Private Limited (DHPL), which operates the digital health app Doc990, launched commercial operations with the Asiri Group of hospitals, thus expanding its reach to over 100,000 customers.

Ideamart, Dialog’s own Application Programme Interface (API), began operating within the Hutch network in 2016, enabling Ideamart developers to widen their app reach to Hutch subscribers. During the year, Ideamart had a development community of over 5,600 individuals and nearly 11,000 active apps, with its user base surpassing the 1.6 million mark.

In the Digital Money sector, eZ Cash grew its customer base to 2.8 million, with over 30,000 merchants island-wide. The Digital Commerce sector recorded strong growth in monthly turnover and Merchandise Value, with a user increase of 37%.

DBN’s customer base comprises over 570,000 individuals and corporates providing multiple services including fixed telephony, hosted PABX offerings, broadband, Internet leased lines, data communication, Internet Data Centre (IDC), converged ICT solutions, telecommunication infrastructure, transmission and backbone services. DBN’s IDC received the ISO 27001:2013 certification during the year, becoming the first and only Sri Lankan service provider to receive the accreditation and recorded 56% YoY growth in both co-location and Cloud business.

Dialog also successfully completed 4.5G technology trials, which demonstrated download speeds in excess of 1Gbps. The fixed LTE demonstrated an accelerated uptake where the customer base grew by over 100% in 2016, surpassing 200,000 subscribers.

Meanwhile, DTV subscribers grew by 29% during the year. DTV continued to consolidate its growth momentum with subscribers surpassing the 800,000 milestone to reach a subscriber base of over 838,000. DTV added 13 new channels, including three new HD channels, thus expanding its number of channels to more than 130.

Financial Performance

Dialog continued its strong performance trajectory, delivering a consolidated revenue of SLR86.7 billion in 2016. This represented significant double digit growth of 17% YoY, underpinned by strong growth across all business segments. On the back of substantial revenue growth combined with operational efficiencies derived through continued focus on Cost Rescaling Initiatives, Dialog recorded EBITDA growth of 23% YoY to reach SLR29.2 billion. EBITDA margin for 2016 also improved to 33.7%.

Net PAT (NPAT) grew significantly by 74% YoY to SLR9.0 billion. NPAT performance was driven by improved EBITDA and lower non-cash translational forex loss of SLR0.8 billion compared to a loss of SLR2.2 billion the previous year. The Sri Lankan Rupee depreciated against the US Dollar by 3.9% in 2016.

Dialog’s capital expenditure for 2016 was SLR23.2 billion, with investments to capture leadership position in Sri Lanka’s Broadband Sector. Accordingly, capital expenditure was directed towards investments in High-Speed Broadband infrastructure encompassing capacity upgrades for 3G and expansion-focused investments for 4G along with the extension of the Company’s Optical Fibre Network to support robust seamless connectivity.

  • Revenue

    +17%

    • 73,930


      2015

    • 86,745


      2016

    SLR Million

  • EBITDA & EBITDA Margin (%)

    +23%

    • 23,824

      32%

      2015

    • 29,212

      34%

      2016

    SLR Million

  • PAT

    74%
    (+33% normalised*)

    • 5,188


      2015

    • 9,041


      2016

    SLR Million

  • Subscribers

    +9%

    • 10.9


      2015

    • 11.8


      2016

    Million

  • Blended ARPU


    • 362


      2015

    • 396


      2016

    SLR

  • Blended MoU (Per Sub Per Month)


    • 145


      2015

    • 133


      2016

    Minutes of use/sub/month

Outlook for 2017

Sri Lanka is seeing a rapid transition in its telecommunications industry, with a shifting trend towards data connectivity and digitisation. The mobile subscriber growth rate in Sri Lanka has been increasing rapidly and is expected to moderate in the near future as the market reaches a state of maturity. However, the mobile broadband market is exhibiting strong growth driven by 3G and 4G adoption and increased smartphone penetration.

Digital transformation is reshaping the way businesses operate, with big data and analytics as key business drivers. This has resulted in more corporates migrating to Business Intelligence platforms which Dialog intends to leverage on for future growth.

The Internet of Things (IoT) is playing an increasingly crucial role in the development of Smart City, with more users turning to IoT enabled devices within the key segments of Health, Near-Field Communication (NFC), Radio Frequency Identification (RFID) tagging, Home Security and Home Automation. Dialog intends to capitalise on IoT opportunities available to further augment its profitability.

Footnote

* Normalised for forex losses