Financial Resilience, Inclusive Progress

Revenue

The Group’s recovery trajectory continued through 2025, with revenue reaching LKR 114.2 Bn., representing a 3% increase over 2024. Growth was supported by:

• Expansion of Mobitel’s prepaid broadband segment and increased Average Revenue Per User (ARPU)
• Continued growth in SLT’s fibre broadband services

A stabilised macroeconomic environment, characterised by a relatively stable currency and easing interest rates, contributed to improved cost structures and enhanced financial predictability. While top-line growth remained modest, the Group successfully translated this into substantially higher earnings through disciplined cost management and improved capital allocation.

EBITDA and Operating Performance

The Group achieved an EBITDA margin of 37%, reflecting improved operational efficiency and cost discipline. Operating costs were effectively contained with increase limited to approximately 3%.

Segmental performance remained strong:

• Fixed Operations EBITDA margin surged to 36.1%
• Mobile operations EBITDA margin increased to 31.5%

This performance was driven by sustained growth in fibre broadband services, continued expansion of Mobitel’s prepaid and postpaid segments and the cost efficiencies.

Cost Management and Efficiency

Cost discipline remained a key focus area in 2025. The Group implemented a range of initiatives to optimise operating costs, including:

• Renegotiation of vendor contracts
• Field-force optimisation
• Reduction in vehicle hiring costs
• Tight control over discretionary spending

Mobitel’s network rationalisation and commercial optimisation initiatives contributed to reducing cost-to-serve while increasing revenue per user.

Capital expenditure was prioritised and closely monitored through Board subcommittees to ensure resource alignment with strategic objectives and efficient utilisation of resources. The parent company focused on fibre expansion while Mobitel focused on expanded coverage, resulting in an increase in operating cost only by 3%.

Profitability

The Group reported a Profit After Tax (PAT) of LKR 10 Bn., supported by:

• Improved EBITDA conversion
• Reduced finance costs driven by active debt management
• Return of Mobitel to profitability
• Favourable tax treatment following the expiry of the turnover based tax option. These factors collectively contributed to a meaningful improvement in overall profitability and financial resilience.

Financial Position

The Group’s financial position strengthened during the year, supported by improved cash flows and disciplined capital management. This was evidenced by enhanced operating cash flows, which enabled accelerated debt settlement, alongside strong collection ratios and tighter credit controls. The Group also continued to invest in fibre infrastructure and network expansion, reinforcing its long-term growth capacity. Looking ahead, the Group remains focused on progressive deleveraging, supported by enhanced collections, efficient working capital management, and improved credit terms from creditors.

Non-Current Assets

Property, Plant and Equipment (PPE) remain the single largest component of the Group asset base, accounting for approximately 69% of Total Assets. The net book value of PPE of the Group decreased from LKR 173 Bn. as at 31 December 2024 to LKR 161 Bn. as of end 2025, reflecting ongoing depreciation and amortisation.

Current Assets

The composition of current assets improved during the year, with trade and other receivables reducing from 69% in 2024 to 62% of total current assets in 2025, reflecting enhanced collection efforts. Cash and short-term investments increased to 28% from 21% in 2024, strengthening the Group’s liquidity position, while other current assets remained stable at 10% of the total current assets.

Capital and Funding

The Group’s capital structure strengthened further in 2025, with equity increasing to LKR 101 Bn. as at the end of 2025 compared to LKR 91 Bn. as at the end of 2024, supported by improved profitability. The Group maintained a balanced funding structure, with continued emphasis on strengthening equity buffers, reducing borrowings and enhancing financial flexibility.

Cash Flows

Net cash flows generated from operating activities increased significantly by 74% to reach LKR 40 Bn. This growth was primarily driven by a significant reduction in interest payments resulting from lower interest rates, tax structure changes in Mobitel, effective cost management and improved collections. Cash outflows for investing activities amounted to LKR 19 Bn. in 2025, compared with LKR 26 Bn. in 2024, reflecting continued investment in infrastructure and network expansion. Despite these investments, the Group maintained a healthy closing cash position of LKR 4 Bn., supporting both operational stability and future growth.

Value to Investors

SLT Group has delivered sustained earnings growth underpinned by a coherent strategic framework that integrates brand unification, market positioning, and disciplined capital deployment. The unified SLT brand has strengthened customer recognition and cross sell opportunities across fixed and mobile platforms, while targeted capacity expansions and selective investments in advanced technologies have preserved competitive advantage and supported incremental revenue generation. These operational choices have translated into consistent value creation for shareholders over the reporting period.

From a financial capital perspective, the Group’s strategy has emphasised prudent allocation of resources to high return projects and the preservation of margin through cost discipline. Strategic capacity investments—particularly in fibre infrastructure and mobile network upgrades—have been financed with an eye to long term cash returns rather than short term revenue maximisation. This capital allocation discipline, combined with ongoing efficiency initiatives, has improved EBITDA conversion and strengthened free cash flow available for de-leveraging and reinvestment.

Corporate governance and stakeholder stewardship have been central to sustaining investor confidence. Robust governance practices, transparent disclosure, and a clear risk management framework have reduced information asymmetry and supported favourable financing terms. Concurrently, the Group’s commitment to social and environmental responsibility has reinforced its license to operate, mitigated reputational risk, and aligned SLT’s long term strategy with evolving regulatory and investor expectations regarding sustainability.

Taken together, these elements have produced measurable investor value: stable revenue foundations, improving margins, and enhanced balance sheet resilience. For the Board, the implication is clear—continue to prioritise disciplined

capital allocation, maintain rigorous governance and disclosure standards, and ensure that technology and capacity investments are tightly linked to demonstrable cash flow outcomes. These actions will preserve the durability of earnings growth and convert the Group’s strategic advantages into sustained shareholder value.

Value Added Statement

	2025		2024
	LKR Mn.	%	LKR Mn.	%
Value Added
Revenue	114,176		111,148
Other Income	3,822		3,128
	117,998		114,276
Goods and Services purchased from other sources	(43,557)		(41,385)
Value creation	74,441		72,891
Distribution of Value Added
To Employees
- Salaries, wages, and other benefits	24,355	32.72	23,018	31.58
To providers of capital
- Dividend to Shareholders	451	0.61	–	–
To Government
- Taxes and Regulatory fees	5,376	7.22	8,642	11.86
To Lenders
- Interest and Related Charges	6,695	8.99	8,280	11.36
To Business Expansion and Growth
- Depreciation	28,001	37.62	29,831	40.93
- Retained Income	9,563	12.85	3,120	4.28
	74,441	100	72,891	100

Stock Market Performance Highlights

The market performance of Sri Lanka Telecom PLC’s share demonstrated strong growth during the financial year ended 31 December 2025. The share price reached a high of LKR 91.60 and traded within a range of LKR 53.10 to LKR 91.60 during the year. The closing price as at 31 December 2025 was LKR 82.50, representing a substantial increase compared to LKR 69.50 at the end of the previous financial year. Market capitalisation as of 31 December 2025 was LKR 149 Bn.