Operating Revenue

The operating revenue was Rs. 18,281 million with a 7% annual increase.

The local telephone revenue was Rs. 8,748 million with a 53% annual increase. This significant increase was made by continuous network expansion and tariff revision. The number of new connections during the year was 134,000 and the total number of line in service went up to 580,000 at the end of the year. New tariff was introduced from 1st of June. The revision was made in line with the five-year tariff rebalancing programme, seeking for cost-oriented tariff. Monthly rental charges and domestic call charges were revised so as to increase the revenue by 25%.

The international telephone revenue was Rs. 2,816 million with a 1% annual increase. While the international tariff was revised downward by 10%, coupled with the domestic tariff increase, the traffic volume of international outgoing calls increased by more than 10%. As a result, the revenue showed a small increase.

The international inpayment fell to Rs. 5,764 million with a 25% annual decrease. The traffic volume of international incoming calls did not increase as in the previous year and the settlement rates between operators decreased in a range of 10-40%. These factors caused a sharp drop in the revenue.

In terms of the revenue structure, there was a notable change in 1999. The domestic portion exceeded 50% of the total operating revenue.The decline of the international proportion accelerated and it dropped to 47% in 1999 from 61% in 1998.

Operating Expenditure

The operating expenditure was Rs. 13,193 million with a 10% annual increase. Depreciation cost was Rs. 5,001 million with a 4% annual increase, equal to 37% of the total operating expenditure.Staff cost was Rs. 2,317 million with 10% increase, equal to 17% of the total. Payments to foreign operators was Rs. 2,252 million with 2% increase, equal to 17% of the total. These three are major items in the operating expenditure.

Non Operating Expenditure

The non operating expenditure was Rs. 3,313 million. This was an increase of Rs. 1,414 million. This is comprised of interest expense and other financial costs. The interest expense was Rs. 2,363 million and the increase of interest expense was Rs. 1,025 million. This was due to the increase in borrowing to finance the network expansion. The foreign exchange loss on foreign currency denominated loans due to the devaluation of Rupee was Rs. 875 million.

Profit

EBITDA was Rs. 10,089 million with a 3% annual increase and EBITDA margin was 55%. SLT invested Rs. 13.4 billion in 1998 and Rs. 15.3 billion in 1999 in the development of the network. This investment caused an increase of depreciation cost. The increase in depreciation cost was Rs. 208 million. Consequently the operating profit was Rs. 5,088 million, representing a 1% increase in 1998. As explained the increase in total financial expenses was Rs. 1,414 million. As a result, the profit before tax declined to Rs. 2,325 million from Rs. 3,482 million. For the same reason, the profit after tax fell to Rs. 1,269 million from Rs. 2,222 million. However, as the capital investment already passed its peak in 2000, the increase in depreciation cost will reduce from 2002 and the financial expenses will reduce and decline in time and this will have a beneficial impact starting from 2002.