SLT Group Q2 2023 results underpin importance of pricing

During the first half of 2023, Mobitel revenue was contracted by Rs. 2.2Bn compared to revenue for the same period in 2022 and the loss recorded for the period was Rs. 1.5Bn. However, with the recent management changes, Mobitel has been able to arrest the decline in subscriber base and revenue.

SLT CEO Janaka R. Abeysinghe, said, “Prolonged recovery from the effects of the economic downturn, loss of Mobitel subscriber base, low productivity, and delay in monetization of fibre network have had a significant impact on the revenue generation of the Group.”

“Managing the escalating operational costs, resulting from fluctuations in exchange rates and inflationary conditions etc. is a huge concern. In this context, pricing is key but setting the right price has become increasingly challenging. This situation will add pressure to our revenue generation and top-line performance.”

“Under these conditions, the Mobitel turnaround has become an immediate concern. However, we will continue to forge ahead, with increased productivity and navigate through the current economic uncertainties.”

While SLT PLC had 2.4% (Rs.400 mn) revenue growth, Mobitel recorded 9.3% (Rs. 1,066 mn) de-growth during Q2 ‘23 compared to Q2’22. Group revenue, therefore, decreased by 2.8% (Rs.763mn) from Q2’22 to Q2’23.

SLT PLC’s revenue increase was driven by growth in Broadband, IPTV, and Enterprise revenue streams. However, such an increase was slowed down due to a decrease in International Transit revenue (90.3%, Rs.614 mn) during Q2 ‘23, though it must be noted that such international transit revenue has virtually no margin.

SLT PLC’s revenue growth was primarily hindered due to delays in the monetization of a fibre network and customer churn. Revenue de-growth in Mobitel was due to a significant decline in the subscriber base. Subscriber base contracted by 1 mn from June 2022 to June 2023.

Group Opex increased by 15.1% (Rs.2,513mn) in Q2 ‘23 compared to the corresponding quarter in the previous year. Even though Mobitel revenue has declined YoY, Opex increased by 30.4% (Rs. 1,998mn) during Q2 ‘23 due mainly to sales-related commissions.

Group EBITDA dropped by 31.9% (Rs. 3,276mn) during Q2 ‘23 due to a decrease in Mobitel EBITDA by 61.9% (Rs. 3,064mn). Accordingly, Group Operating Profit, PBT and PAT also decreased by 92.7% (Rs.3,121mn), 161.3% (Rs.6,039mn) and 208.0% (Rs.4,076mn) respectively. Mobitel recorded Rs. 835 mn Operating Loss due to lower revenue and higher Operating Costs, ending with a net loss of Rs. 1,390 mn for the quarter.

SLT PLC’s net loss for the quarter was Rs. 1,027mn due to cost escalations and impairment of LTE assets. SLT PLC staff costs account for 36.8% of Operating Costs.

SLT Group’s revenue growth was stagnant for the first half of 2023 to record Rs. 52.7Mn, a 0.4% degrowth compared to the same period last year. At a company level, SLT revenues grew by 6.4% to Rs. 34.6Bn for the first half of 2023.

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