Profit vs Growth

January 28, 2008 (LBO) – Investors in telecommunications stocks in emerging markets like Sri Lanka are more concerned with business growth and cash flows instead of reaping dividends, the head of the island’s top celco said. . “Investors in stock markets, in telco shares, in ICT stocks look at cash flows,” said Hans Wijayasuriya, chief executive of Dialog Telekom.

“They are not so concerned about the bottom line,” he told the ICT 2008 conference organised by LAWASIA, a professional association of representatives of bar councils, law associations, individual lawyers and law firms from the Asia-Pacific region.

“This is an endorsement of the fact that developing markets are about a large number of low income subscribers and therefore investors across the world encourage operators to build out fast and operate on a marginal free cash flow model so that more subscribes get more services which they use more and the cash flows will drive further investment and re-investment.”

Wijayasuriya said Dialog Telekom, owned by Telekom Malaysia, itself was a good example of this model with a reinvestment ratio over the last few years of 140 percent of profits.

“This has been encouraged by not only the principal investor