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The pay TV business of Sri Lanka's Dialog Telekom group will take time to become profitable, with break even estimated at around 250,000 customers, its chief executive Hans Wijayasuriya said.
Losses in the pay TV business of the company, a unit of Telekom Malaysia, contributed to an annual group loss of 2.8 billion rupees in 2008, against a profit of 8.9 billion a year earlier.
Wijayasuriya said the experience elsewhere in pay TV is that it usually takes time to sign on enough subscribers to achieve break even.

"Dialog TV has a projection of achieving a break even point at around 250,000 customers," Wijayasuriya told LBO in an interview. "We now have 150,000.

"As is the case in the pay TV industry worldwide, it takes some time to get to that critical mass of customers, to therefore amortise the cost of satellite bandwidth, satellite transponders, and also content and programming costs."

Wijayasuriya, who is also group chief operating officer of Malaysia's TM International, the parent firm of Dialog Telekom, said Dialog's pay TV business was growing well but declined to say when it would start making money.

"I would not want to comment on a specific time frame, but Dialog TV has been growing very well and is highly accepted in the market place," he said.

"We have 150,000 customers who have joined us over the last 18 months. Therefore to achieve another 100,000 we're probably talking about 12-15 months."

Apart from losses in its pay TV and broadband business, Dialog has also bee hurt by a fierce price war that began with the entry of India's Bharti Airtel into the mobile market.

The company is relying on alternative revenue streams such as broadband, pay TV and fixed wireless as future growth areas as growth slowed in the mobile market, which it still dominates.

But industry analysts have warned that economic slowdown which has reduced consumer spending power could affect Dialog TV's immediate growth prospects.

Furthermore, the firm might have to pay more for foreign content with the depreciation of the rupee against the dollar.

The Dialog group has announced a series of cost cutting measures, including a voluntary retirement scheme to trim staff costs

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