Sri Lanka Telecom PLC (SLT) released its Group and Company financial results for the 1st Quarter 2018, today.

The group has reported EBITDA or Operating Profit before depreciation and amortization of Rs. 6.1 bn during the 1st quarter 2018, with a Year on Year increase of 8.5%. The EBITDA margin of the Group increased from 30.1% last year to 30.8%. Controlling of cost escalations while sustaining revenue growth have resulted in better EBITDA levels. The group revenue for the quarter under review was reported at Rs. 19.8 bn with Year on Year growth of 5.9%, while operating cost was reported at Rs. 13.7 bn during the quarter with 4.7% Year on Year increase.

Large investments made by the group during the recent years have continued to affect the company profits adversely due to mainly the increased charges in depreciation. The Group Depreciation and amortization have increased by Rs.512 mn in absolute terms showing a 12.8% Year on Year increase to Rs.4.5 bn. This increase of Depreciation and amortization has resulted in a marginal drop in Group operating profit to Rs. 1.58 bn compared to Rs 1.62 bn in the corresponding period of previous year. The group has largely invested in new technology and capacity expansion of LTE, FTTH, IPTV, Global connectivity and Mobile services in catering the expanding customer base and providing more services.

The gamut of SLT’s investments in the recent past also included the expansion of National Backbone Network, launching of its newly built state-of-the-art Tier 3 Data Centre the country’s first ‘Purpose built tier 3 Data Centre’, SEA-ME-WE 5 undersea cable system, and newly established cable landing station in Matara within the third quarter. SLT is also committed to further oversee South Asia’s first cutting-edge submarine cable depot in the Galle Port. With enhancing multiple global connectivity options with SEA-ME-We 5 international submarine cable system, company also provides global connectivity backhauling facility to international operators.

Increase of depreciation and amortization coupled with a drop in other income and interest income have further narrowed by 12.1% and 19.0% drop respectively the Group Profit Before Tax and Profit for the period to Rs. 1.6 bn and Rs. 1.2 bn compared to the same period of previous year.

The holding Company have reported Rs.3.5 bn EBITDA or Operating profit before Depreciation and Amortization with Year on year growth of 13.2%. The Company has been able to enhance its EBITDA margin to 30.0% from 27.2% a year before, keeping its operating costs at Rs. 8.1bn, 1.1% year on year lower while increasing the revenues to Rs.11.5 bn with 2.8% year on year growth. As reasoning out under group performance, the company depreciation and amortization have also increased almost to Rs.3 bn during the 1st quarter 2018. Despite the increase of depreciation and amortization the company reported an Operating Profit of Rs. 502 mn during the 1st quarter 2018, with an increase of 4% from same quarter of the previous year. Impacting largely from drop in other income to Rs.120 mn during the 1st Quarter 2018, the Profit before tax and Profit for the period have reported at Rs. 501 mn and Rs. 332 mn reporting year compared to Rs 627m and Rs 545m.

Despite the higher depreciation and amortization challenging the profitability, these investments have largely enhanced the company asset base. Further the company expects robust profitability in the future by sustainable growth in revenues through capacity utilizations and effective cost management.