100% next-generation network to cut future network costs

August 14, 2009

2 Min Read

COLOMBO, Sri Lanka -- Dialog Telekom PLC announced on Thursday, 13 August, the financial results for the quarter ended 30 June 2009. In tandem with operating results the Company announced a further step in its on‐going cost reduction programme, featuring a one‐off network modernisation step to achieve a 100% Next Generation Network (NGN) Core Network, which in turn required a special provision for impairment.

The operational performance of Dialog Telekom PLC (the “Company”/“Dialog”) signaled a 14% increase in operating profit normalised for exceptional charges (EBITDA) on an adjacent Quarter‐on‐Quarter basis, consolidating the upward performance trend set in the previous (first) quarter. Revenues grew 3% QoQ while Direct costs and Operating costs excluding depreciation and exceptional charges reduced by 2% and 3% respectively on adjacent quarter basis.

Dialog Telekom Group Chief Executive, Dr. Hans Wijayasuriya stated that network modernisation presented a strategic opportunity to reduce operating costs in the future, supplementing other cost reduction measures adopted by the Company. He further stated that the incremental investment required to achieve a 100% NGN Core Network was modest at around Rs 485 Million (USD 4.2 Million) since the Company had commenced its transition to a NGN based Core Network in 2006. Dr. Wijayasuriya stated that the Company is focused on exploiting operational and structural opportunities to re‐scale its cost structure and regain profitability, enabling the delivery of attractivereturns to shareholders.

The Company’s Chief Executive Dr. Hans Wijayasuriya explained that NGNs provide technologically progressive operators with the opportunity to de‐scale operating costs by a significant margin, while also reducing future capital expenditure and carrying values of core network assets due to the over 80% reduction in per‐subscriber core network capital costs. The modernisation of Dialog’s core network which is already 62% NGN, is slated to deliver a positive impact of Rs. 1.5 Bn. to the Company’s P&L on an annualised basis going forward, and is further supported by an Internal Rate of Return (IRR) in excess of 100% and a payback period of less than one calendar year from the point of commissioning. Dialog’s NGN core network will support the Company’s 6 Mn. strong and rapidly growing subscriber base in addition to enabling a host of advanced subscriber features and convergence opportunities.

Dialog Telekom

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