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Price war pushes down

revenues at Dialog; one-off

costs cause LKR7.7 billion loss
Sri Lankas largest cellco by subscribers, Dialog Telekom, has posted its results for the second quarter of 2009,
showing that consolidated revenues fell by 4.6% year-on-year to LKR8.75 billion (USD76 million) due to tough price
competition and a slow economy. The GSM operator, a subsidiary of Malaysias Axiata (formerly TM International),
recorded a net loss of LKR7.67 billion in the three months to the end of June, compared to a quarterly net profit
of LKR335 million a year before, as it said administrative costs in 2Q 2009 almost quadrupled to LKR9.1 billion
from LKR2.3 billion a year ago, including a LKR6.0 billion one-off write-down of older network equipment. It was the
companys fourth straight quarterly loss, as it invests heavily in mobile, backbone, broadband internet and fixedwireless infrastructure, and applies hefty discounts to mobile services to maintain its lead in the market. Dialog
announced that on 12 August it launched services in Kilinochchi, Mullaitivu and four other towns in former war zones
in Sri Lankas north, and plans to expand rapidly across other areas where fighting between government and rebel
forces recently ceased. Dialog intends to roll out its 2G and 3G/3.5G mobile services, CDMA-based fixed line and
WiMAX-based broadband services across the countrys Eastern and Northern provinces. Dialogs core mobile
revenues were LKR7.9 billion in April-June 2009, down fromLKR8.3 billion a year earlier, although up from LKR7.7
billion quarter-on-quarter. The operator had 5.99 million cellular subscribers by mid-2009, up 25% from a year earlier
and up 2% from the first quarter. Meanwhile, Dialogs pay-TV service signed up around 136,000 subscribers by endJune, up 5% from the end of March.
Sri Lankas mobile price war has been fuelled by the arrival of Indian-owned Bharti Airtel which launched as the fifth
operator at the beginning of this year, and announced last month it had signed up one million customers, attracted by
offers such as free incoming calls. The GSM unit of incumbent fixed line operator, Mobitel, increased its subscriber
base by 61% year-on-year to 2.99 million at end-June 2009, whilst Hong Kong-backed Hutchison
Telecommunications Lanka appeared to be a victim of the price war, reporting that subscribers dropped to 536,000 by
mid-2009 from 772,000 the previous quarter. Tigo Sri Lanka, owned by Luxembourg-based Millicom International
Cellular (MIC), has not reported customer figures for 2Q as MIC is in the process of selling its Asian businesses; Tigo
had 2.11 million subscribers as of end-March 2009.

Pls refer the Dialog 2009 annual report page 35.

This not says directly this loss happens due to Mobitel Upahara and SMART 5. But
this loss happens due to that.