Overview
Sri Lanka Telecom provides fixed, mobile, enterprise, cloud and international ICT services through its SLT, Mobitel and Xyntac operations. The central change is an earnings recovery driven by broadband-led revenue growth and materially stronger operating profitability, while the group continues to fund network and digital-infrastructure investment.
The latest reported half-year results confirm that the June-quarter improvement was not an isolated print: SLT reported accelerating first-half revenue and profit growth, despite currency, fuel and utility cost pressures.
Price performance
SLTL closed at LKR 86.70 on 4 September 2026. The share gained 2.2% over three months while the ASPI fell 1.8%, and its 35.7% one-year return exceeded the index’s 4.7% gain.
The price sat 54.2% through its 52-week range, rather than near either extreme. Sixty-day volatility was 46.9% below its own one-year level and 20-day trading volume was 27.0% below the 60-day average, indicating quieter recent trading in this share.
Valuation
At 12.69 times earnings and 1.47 times book value, SLT trades well below the telecom_it peer-group medians of 79.91 times and 5.85 times respectively. Its 11.6% return on equity over the twelve months to June 2026 provides underlying support for profitability, though the supplied sector group includes businesses with markedly different models.
The 0.9% dividend yield is below the sector median of 4.3%. The payout rose from LKR 0.25 per share for 2024 to LKR 0.75 for 2025, but the current 11.0% payout ratio leaves dividends a secondary element of the valuation case. A sector percentile comparison was not supplied. Market-wide, the shares score 51 out of 100 on price against book value, earnings and dividends, placing them in the fairly valued band.
News and sentiment
Company coverage was normal rather than unusually elevated, with 2 articles in the past 30 days versus a monthly baseline of 1.2. All 4 material articles assessed over 90 days were positive.
On 18 August, SLT reported first-half 2026 revenue of LKR 61.3 billion and profit after tax of LKR 6.6 billion, up 11.1% and 54.4% respectively. On 5 September, the Government said it would retain SLT-Mobitel as a strategic state asset; this clarifies ownership direction but does not itself quantify an earnings effect. The LKR 0.75 final dividend for 2025 went ex on 22 June and was paid on 10 July.
Financials
June-quarter revenue rose 11.7% year-on-year to LKR 30.5 billion, while net profit increased 55.3% to LKR 3.5 billion. Operating profit grew 30.4% to LKR 5.0 billion, showing that the profit advance was led by operations rather than solely by below-the-line movements.
Gross margin improved from 47.8% to 49.4%, operating margin rose from 14.1% to 16.5%, and net margin increased from 8.3% to 11.6%. June gross margin was the best of the past 7 June quarters, while operating margin ranked second of 7 and net margin third of 7 on a like-for-like basis.
Below-the-line items absorbed LKR 1.5 billion of June-quarter operating profit, still a material deduction from earnings. Equity rose to LKR 106.3 billion from LKR 95.3 billion a year earlier, while shares outstanding remained broadly unchanged at 1.8 billion, so the per-share improvement was not driven by a change in share count.
Risks
The main financial risk is short-term liquidity. The audited December 2025 current ratio was 0.91, meaning current assets remained below current liabilities despite improvement from 0.82 a year earlier.
Debt was LKR 68.4 billion at December 2025, equal to 67.9% of owners’ equity, although this was down from 100.3% a year earlier. Interest cover improved to 2.01 times from 1.25 times, but remains limited relative to the group’s investment needs. Annual operating cash conversion was strong at 2.82 times, supporting the reported earnings recovery rather than weakening it.
The wider operating environment also carries cost risk. As at 6 September 2026, higher fuel prices had pushed August inflation to 8.0%, while SLT itself identified currency depreciation, fuel and utility costs as pressures on the first-half result.
Outlook
As at 6 September 2026, the next reported catalyst is the September-quarter filing, which is expected between 12 November 2026 and 2 March 2027 based on exchange reporting patterns. It will show whether the broadband-led growth and June-quarter margin improvement continued while network investment and operating costs remained elevated.
The data confirms planned further 5G and coverage investment but does not disclose its cost, timing or revenue contribution. It therefore cannot establish the near-term earnings effect of that investment. Sector-wide, the January implementation of key PDPA provisions raises digital compliance demands, relevant to SLT’s enterprise, cloud and data-centre activities.