Sri Lanka Telecom’s revenues cut by court case

Sri Lanka Telecom (SLT), the island’s incumbent fixed line operator, has reported a 45% drop in net profits in the quarter ended June 2007, on the back of a LKR875 million (USD8.1 million) fall in revenues, pending a court decision on a case filed by a consumer organisation over end-user tariffs. SLT reported net income of LKR560 million, down from LKR1 billion a year ago, on revenues of LKR9.7 billion, down 3% year-on-year, after taking off LKR785 million pending a final court decision. ‘The court directed the parties to have further discussions on the reduction of tariffs from the domestic telephone revenue and rental charges excluding new connection charges,’ SLT said in a statement. The operator has also been asked to switch to per second billing. The next hearing is on 27 August when a finalised proposal on tariffs from the telco would have to be submitted to be effective from 1 January 2007. SLT said its first half group net profits were still up 10% to LKR2.54 billion, from LKR2.30 billion in 1H 2006, and added that the impact of the revenue reduction would be short term. ‘We believe that in the competitive environment the reduced tariff will stimulate demand and this will help to mitigate the impact on revenue,’ Chief Executive Shoji Takahashi said in a statement, adding that, ‘the new time based tariff structure will give consumers a benefit, and thus encourage greater usage. SLT has confidence in its revenue growth despite the tariff reduction.’ SLT said domestic call revenue fell 3% in the first half to LKR9.8 billion, while mobile revenues through its subsidiary Mobitel surged 24% to LKR3 billion. Mobitel posted a small profit of LKR34 million in the six-month period. International revenues were up 11% to LKR4.5 billion with data services turnover up 79% to LKR1.9 billion.