Profits at listed Distilleries Company of Sri Lanka grew 49.2 percent from a year earlier to 1.5 billion rupees in the June 2021 quarter led by rise in revenue which offset a faster rise in expenditure.
KEY RATING DRIVERS
Mobile-Market Leader: Dialog’s Standalone Credit Profile (SCP) of ‘aaa(lka)’ is underpinned by its market leadership in the expanding mobile and pay-TV segments. We believe Dialog will continue to gain revenue market share, given its superior execution and mobile networks. The company has a solid financial profile, with consistent revenue growth, a stable operating EBITDA margin and a low Fitch-forecast 2021 FFO net leverage of 0.4x-0.5x (2020 estimate: 0.5x).
Strong Revenue Growth: Based on unaudited reported results, revenue and EBITDA rose by 3% and 6%, respectively in 2020, before the operating lease adjustment under Sri-Lankan financial reporting standard 16. Dialog’s growth outperformed the GDP contraction of 5% in the nine months ending September 2020, amid the pandemic. Dialog increased its mobile subscribers by 9% yoy, its digital TV households by 12% yoy and home broadband subscribers by 45% yoy during 2020.
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Fitch Ratings has affirmed Sir Lanka Telecom PLC’s (SLT) National Long-Term Rating at ‘AA-(Ika)’. The Outlook is Stable. We have also affirmed the ‘AA-(Ika)’ national rating on the company’s LKR7 billion of senior unsecured debt.
SLT’s ratings are constrained by the sovereign’s ratings as per Fitch’s Government-Related Entities Rating Criteria, as the state holds a majority stake in SLT directly and indirectly, and exercises significant influence on its operating and financial profile.
SLT’s unconstrained standalone credit profile is stronger than that of the government of Sri Lanka, reflecting the company’s market leadership in fixed-line services and second-largest position in mobile, its ownership of an extensive optical-fibre network, and a solid financial profile.