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Sri Lanka' Dialog Sees Slump in PrePaid Additions
Sri Lankan market leader Dialog finished Q3 08 just short of 5m customers, with an end-quarter base of 4.98m. Quarterly net additions stood at 172k, the lowest figure for three years. This was due to a slump in prepaid net additions, which fell by 53.6% year on year to 141k. Meanwhile, contract net additions were up from 4k in Q3 07 to 31k in Q3 08. Customer quality still declined year on year with a 0.7pp fall in the contract percentage to 12.5%, but there was a quarterly rise of 0.2pp. In real terms, there were 0.62m contract customers at the end of the quarter, compared to 4.36m prepaid.
Penetration in Sri Lanka looks set to surpass 50% within the next year, and growth has been slowing for some time. DialogÃ's slowdown has been particularly marked, with Q3 08 seeing all-time lows for both quarterly and annual growth. The former fell below 5% for the first time ever, and in fact the figure of 3.6% was less than half the 8.4% recorded in the year-earlier quarter. Annual growth stood at 25.6% compared to 39.8% for the prior twelve months.
The companyÃ's other reported KPIÃ's did little to alleviate this somewhat gloomy picture. Annualised churn rose sharply in the quarter, the first such increase for over two years, with a figure of 7.7% compared to 6.0% in Q2 08. This seems to be the key factor behind the poor performance for prepaid net additions. Unfortunately, prepaid ARPU also fell, with a cumulative average of SLR 340 per month, the lowest figure recorded since the company began reporting this metric in 2005. Contract ARPU was essentially flat quarter on quarter at SLR 1,467 but the annual decline was 14.9%. Meanwhile, the blended figure was also at an all-time low of SLR 480.
The decline in ARPU was outweighed by the increase in customers, leaving nine-month revenues up 3.8% at SLR 25.2bn. However, a 48.8% increase in costs of network operations to SLR 12.5bn left gross profit down 20.1% at SLR 12.7bn. Meanwhile, EBITDA fell 32.5% to SLR 7.6bn, implying a dramatic decline in the EBITDA margin from 46.6% in 9M 07 to 30.3% in 9M 08.
Posted to the site on 26th November 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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