Auditor General’s Report

Chairman

Sri Lanka Telecom PLC

Report of the Auditor General on the Financial Statements and Other Legal and Regulatory Requirements of the Sri Lanka Telecom PLC and its subsidiaries for the year ended 31 December 2025 in terms of Section 12 of the National Audit Act, No. 19 of 2018.

1. Financial Statements

1.1 Opinion

The audit of the financial statements of the Sri Lanka Telecom PLC (“the Company”) and the consolidated financial statement of the Company and its subsidiaries (“the Group”) for the year ended 31 December 2025 comprising the statement of financial position as at 31 December 2025, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, was carried out under my direction in pursuance of provisions in Article 154 (1) of the Constitution of the Democratic Socialist Republic of Sri Lanka read in conjunction with provisions of the National Audit Act No. 19 of 2018. My report to Parliament in pursuance of provisions in Article 154 (6) of the Constitution will be tabled in due course. To carry out this audit, I was assisted by a firm of Chartered Accountants in public practice.

In my opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31 December 2025, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

1.2 Basis for opinion

I conducted my audit in accordance with Sri Lanka Auditing Standards (SLAuSs). My responsibilities, under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

1.3 Key audit matters

Key audit matters are those matters that, in my professional judgment, were of most significance in the audit of the financial statements of the current period. These matters were addressed in the context of the audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. For each matter below, my description of how my audit addressed the matter is provided in that context.

I have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the Financial Statements section of my report, including in relation to these matters. Accordingly, my audit included the performance of procedures designed to respond to my assessment of the risk of material misstatement of the Financial Statements. The result of my audit procedures, including the procedures performed to address the matters below, prove the basis for my audit opinion on the accompanying Financial Statements.

Key Audit Matter	How my audit addressed the key audit matter
Revenue recognition of fixed telephony and mobile communication services The Group recognized revenue of Rs. 114,176 million from the provision of fixed telephony & mobile communication services for the year ended 31 December 2025 in accordance with its accounting policy set out in Note 3 (l) and disclosed in Note 6 (a) to the financial statements. Recognition of revenue from the provision of fixed telephony & mobile communication services was a key focus of my audit due to: Complexity in revenue recognition as a result of: Frequent changes in rate structures and arrangements with multiple product features. Large volume of transactions which arise from sales of different combinations of hardware and services. Multiple IT systems which are used to capture, process and record the revenue. Significant judgement exercised by management when determining: Whether to recognize revenue at a point in time or over a period for revenue arrangements Duration of customer contracts Transaction price and allocating it to bundled products and services	My audit procedures included the following key procedures; Tested the relevant key IT-dependent manual controls and manual controls over the capture and measurement of revenue transactions. Tested the IT General Controls and relevant key IT Application Controls of IT systems which have a significant impact over revenue recognition. Our procedures also included testing the adequacy of controls implemented for security monitoring aspects over selected IT systems related to revenue recognition with the assistance of our internal specialized resources. Performed re-computations and tested end-to-end reconciliations in relation to capture and measurement of revenue transactions, as relevant. Assessed the reasonableness of significant judgements made by management when determining the timing of revenue recognition, duration of customer contracts and when allocating transaction price to performance obligations, based on the respective terms and conditions of customer contracts. Assessed the adequacy of related disclosures reflected in Note 3 (I) and Note 6 (a) of the Financial Statements.
Carrying Value of Network Assets As at 31 December 2025, the Group’s network assets including capital work in progress amounted to Rs. 144,656 million and represented 62% of the total assets of the Group. Carrying value of network assets including capital work in progress was a key focus of my audit due to: Materiality of the reported depreciation on network assets which amounted to Rs.19,514 million for the year ended 31 December 2025. Judgements used by management associated with estimating the useful lives of the network assets by the Group. It involves the Group’s collective assessment of the industry practice, internal technical evaluation and experience with the similar assets in concluding the useful economic life of the network assets. The degree of management assumptions, judgements and estimates associated with the estimated future cashflows used for the value in use calculations of selected network assets. The degree of judgement involved, and assumptions used by management when assessing impairment of amounts of capital work – in – progress relevant to network assets. The timing of recognition of commissioned assets from capital work-in-progress to network assets considering the significant judgements involved and appropriateness of the date from which network assets commenced being depreciated.	My audit procedures included the following key procedures; Obtained an understanding of the Group’s process in estimating the useful lives of network assets. Assessed the reasonableness of judgements used by management to estimate the useful lives of network assets to internal technical evaluations and publicly available information. Gained an understanding of how the management has forecasted its discounted cash flows of selected network assets and tested the completeness and accuracy of the underlying data used by the management. Evaluated management’s impairment assessment of network assets including the judgements made by the management on: I. the nature and impact of changes on the business strategy and business environment including which specific assets are impacted; and II. the extent of the impact of these changes on the carrying value of identified network assets.
	Assessed the reasonableness of management judgements applied and assumptions used in relation to capital work-in-progress of network assets including possible indicators of impairment which were identified by the management for any project related to network assets which have not been commissioned for a prolonged period, based on my knowledge of the business and industry. Evaluated the current status of completion of those projects in relation to budgeted project duration and assessed whether amounts related to network assets commissioned for use have been appropriately transferred out of capital work–in-progress and recognized under the relevant class of property, plant & equipment, on a timely basis, through discussion with the respective project managers and inspection of relevant documentation. Determined the appropriateness of capitalization of cost for network assets during the year. Assessed the adequacy of related disclosures reflected in Note 3 (d) and Note 14 of the Financial Statements.

1.4 Other Information included in the Group’s 2025 Annual Report

Other information consists of the information included in the Group’s 2025 Annual Report, but does not include the Financial Statements and my auditor’s report thereon, which I have obtained prior to the date of this auditor’s report. Management is responsible for the other information.

My opinion on the Financial Statements does not cover the other information and I do not express any form of assurance conclusion thereon.

In connection with my audit of the Financial Statements, my responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work I have performed on the other information that I have obtained prior to the date of this auditor’s report, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

1.5 Responsibilities of the management and those charged with governance for the financial statements

Management is responsible for the preparation of Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

1.6 Auditor’s responsibilities for the audit of the Financial Statements

My objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SLAuSs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of the Company
  and the Group.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements. I am responsible for the direction, Supervision and review of the audit work performed for the purpose of the group audit. I remain solely responsible for my audit opinion.

I communicate with those charged with governance regarding, among other matters, significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

2. Report on other legal and regulatory requirements

2.1 National Audit Act, No. 19 of 2018 and Companies Act, No. 7 of 2007 include specific provisions for following requirements.

2.1.1 I have obtained all the information and explanations that were required for the audit and as far as appears from my examination, proper accounting records have been kept by the Company as per the requirement of Section 163 (2) of the Companies Act, No. 7 of 2007 and Section 12 (a) of the National Audit Act, No. 19 of 2018.

2.1.2 The financial statements presented is consistent with the preceding year as per the requirement of Section 6 (1) (d) (iii) of the National Audit Act, No. 19 of 2018.

2.1.3 The financial statements presented includes material recommendations made in the previous year as per the requirement of Section 6 (1) (d) (iv) of the National Audit Act, No. 19 of 2018.

2.2 Based on the procedures performed and evidence obtained which were limited to matters that are of a material nature, nothing has come to my attention;

2.2.1 to state that any member of the governing body of the Company has any direct or indirect interest in any contract entered in to by the Company which are out of the normal course of business as per the requirement of Section 12 (d) of the National Audit Act, No. 19 of 2018.

2.2.2 to state that the Company has not complied with any applicable written law, general and special directions issued by the governing body of the Company as per the requirement of Section 12 (f) of the National Audit Act, No. 19 of 2018.

2.2.3 to state that the Company has not performed according to its powers, functions and duties as per the requirement of Section 12 (g) of the National Audit Act, No. 19 of 2018.

2.2.4 to state that the resources of the Company had not been procured and utilized economically, efficiently and effectively within the time frames and in compliance with the applicable laws as per the requirement of Section 12 (h) of the National Audit Act, No. 19 of 2018.