Shocking results from Dialog, profits fall badly

The first half 2008 net profit of Dialog Telekom, Sri Lanka’s biggest mobile phone provider, fell sharply by 66 percent to Rs 1.6 billion against the same period in 2007, stunning the Colombo bourse.

Brokers and analysts said the profits were expected to be low given rising competition from existing mobile phone players and also Dialog losing market share. "But this is below all expectations," one analyst said.

Its 2nd quarter 2008 results were even worse with net profit down 78 percent year on year to Rs 538 million.

The results were announced after trading in the Colombo Stock Exchange closed. In a filing to the Colombo Stock Exchange, Dialog, controlled by Kuala Lumpur-based Telekom Malaysia, said it reached a mobile subscriber base of 4.8 million customers as at the end of second quarter 2008, representing a 31 percent year-on-year growth. Revenue growth over the same period was however relatively modest at 6 percent. Analysts said the poor performance of Dialog being the largest capitalised company on the stockmarket is expected to have a major impact in the stockmarket tomorrow (Thursday).