For full year 2008, the group lost 2.8 billion rupee against a profit of 8.9 billion a year earlier. Revenue grew 5.9 percent to 36.1 billion rupees.

Dialog said it had increased subscribers by 29 percent to 5.5 million during the year, fixed and broadband subscribers five fold to 175,000 and pay TV subscribers by 122 percent to 122,000.

Rising energy prices and depreciation was also pushing costs up.

Dialog chief Hans Wijayasuriya said earlier this month in an interview that the group was slowing investments and trimming costs to get the company back in the black.

"This is not something that can be achieved overnight and within the course of 2009, we are confidant that you will see the results of a very focused and ambitious program for Dialog," Wijayasuriya said.

"In a forward looking company which strives to continuously expand its position, continuously looks at going to the most rural parts of the country, continuous to invest whatever the macro economic condition seems to be, you can have the situation where you have invested a little bit too much ahead of demand."

Industry analysts say Sri Lanka's mobile sector is bleeding from price cuts that came ahead of the entry of Bharti Airtel and particularly a cut-price package from another player, Mobitel, aimed at state workers.