Dialog Axiata PLC announced its consolidated financial results for the six months ended 30th June 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’).

The Group concluded the 1st Half of 2017 on a strong note, continuing its growth momentum across Mobile, Fixed Line and Tele-infrastructure businesses to record a consolidated Revenue of Rs23.0Bn for Q2 2017 and Rs45.2Bn for 1H 2017, demonstrating a growth of 4% Quarter on Quarter (‘QoQ’) and 7% Year to Date (‘YTD’). Downstream of Revenue, Group EBITDA (‘Earnings Before Interest, Tax, Depreciation and Amortisation’) recorded a growth of 13% QoQ and 9% YTD to reach Rs8.1Bn for Q2 2017 and Rs15.4Bn for 1H 2017 respectively. The growth was achieved on the back of concerted efforts to drive revenue growth and aggressive cost rescaling initiatives. The Group EBITDA margin accordingly improved to 34% in 1H 2017.

The 2nd Quarter Performance was impacted by externalities including the inclement weather and severe flood conditions during the month of May that dealt a significant impact on livelihood and commerce. Similar to the relief efforts made during the flood situation in 2016, the Dialog Group promptly came to the fore to assist the general public as well as employees affected by landslides and floods. Dialog’s intervention encompassed flood relief donations, the provision of consumption credits and extension of free of cost services which amounted to Rs80Mn. Further the consumer spending continued to be impacted by increased consumption taxes on communication services which moderated revenue growth across Mobile, Fixed, Broadband and Pay Television Businesses.

The Group NPAT (‘Net Profit After Tax’) declined 21% YTD to be recorded at Rs3.9Bn for 1H 2017, impacted by increase in depreciation, net finance cost and non-cash translational forex losses. However, NPAT demonstrated a growth of 52% QoQ to record at Rs2.3Bn for Q2 2017 driven by higher EBITDA and lower non-cash translational forex losses. The Sri Lankan Rupee depreciated against the United States Dollar by a 0.9% in Q2 2017 compared to 1.5% during Q1 of 2017.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs19.1Bn to the Government of Sri Lanka (GoSL) during 1H 2017 representing an increase of 13% YTD. Total remittances included direct taxes and levies (Rs5.7Bn) as well as consumption taxes collected on behalf of the GoSL (Rs13.4Bn).

Sri Lanka achieved yet another milestone on the region’s broadband technology landscape during the quarter, as Dialog Broadband announced the launch of its commercial 4.5G TDD LTE network. The roll-out of South Asia’s first commercial 4.5G TDD LTE network with Dialog’s Home Broadband services will serve as a springboard for the rapid accession towards 5G services, and demonstrates Dialog’s readiness to deliver the most advanced suite of connectivity services to consumers. Dialog, also announced the first successful trial of next-generation, Massive MIMO (Multiple-Input Multiple-Output) Technology. In the race to 5G with unprecedented improvements in network throughput and capacity, MIMO is considered the most compelling technology with superior energy and spectral efficiency.

Group capital expenditure for 1H 2017 was recorded at Rs9.5Bn representing a capex to revenue ratio of 21%. Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's position in Sri Lanka's Broadband sector. Group Operating Free Cash Flow (OFCF) was recorded at Rs1.7Bn for 1H 2017. The Group continued to exhibit a structurally strong balance sheet with the Net Debt to EBITDA ratio being maintained below 1.0x as at end of June 2017.

At an entity level, Dialog Axiata PLC (the ‘Company’) continued to contribute a major share of Group Revenue (83%) and Group EBITDA (79%). On the back of its Mobile customer base of over 12.4Mn subscribers, Company Revenue grew by 4% QoQ to reach Rs19.0Bn for Q2 2017 with Revenue for 1H 2017 being reordered at Rs37.4Bn, up 5% YTD. Company EBITDA grew 13% QoQ to reach Rs6.5Bn for Q2 2017 on the back of Revenue growth combined with cost improvements as alluded to earlier.

The Company NPAT declined 24% YTD to be recorded at Rs4.1Bn for 1H 2017, impacted by increase in depreciation while NPAT demonstrated a strong growth of 35% QoQ to record at Rs2.3Bn for Q2 2017 driven by higher EBITDA and lower non-cash translational forex losses.

Dialog Television (DTV) continued to consolidate its leadership position in the Digital Pay Television space with the subscriber base surpassing 910,000 as at end June 2017. DTV revenue grew 1% QoQ to reach Rs1.5Bn for Q2 2017 while declining 4% YTD to record at Rs3.0Bn for 1H 2017. Subscription revenue grew by 4% and 3% on a QoQ and YTD basis respectively. Driven by Revenue performance and aggressive cost rescaling initiatives, DTV EBITDA grew by 70% QoQ to reach Rs110Mn for Q2 2017 while EBITDA declined by 18% YTD to be recorded at Rs174Mn for 1H 2017 impacted by expansion in foreign currency denominated input costs. DTV Net Loss decreased 30% QoQ while the Net Loss for 1H 2017 increased to Rs528Mn relative to a Net Loss of Rs228Mn recorded in the corresponding period of 2016.

Dialog Broadband Networks (DBN) recorded Revenue of Rs3.0Bn for Q2 2017 and Rs5.9Bn for 1H 2017, representing an increase of 4% QoQ and 36% YTD. Downstream of strong Revenue performance, DBN EBITDA grew 10% QoQ and 77% YTD to be recorded at Rs1.7Bn for Q2 2017 and Rs3.2Bn for 1H 2017 respectively. On the back of healthy EBITDA performance, DBN recorded its second consecutive quarter of Net Profit of Rs331Mn for Q2 2017 up 40% QoQ and Rs568Mn for 1H 2017 relative to a Net Loss of Rs40Mn in the corresponding period of 2016.