RPT-Sri Lanka Dialog Telekom Q2 net down 78 pct

(Repeats story published late Wednesday; no changes to text)

COLOMBO, Aug 13 (Reuters) - Sri Lanka's top mobile operator, Dialog Telekom DIAL.CM, a unit of Telekom Malaysia (TLMM.KL), posted a 78 percent fall in second-quarter net profit on Wednesday, as higher energy costs and high inflation took a toll.

April-June group net profit slid to 537.8 million rupees ($5 million) from 2.44 billion rupees during the same period a year earlier.

Overall group turnover for the quarter rose 13 percent to 9.29 billion rupees.

The results were hit by a rise in costs, driven mainly by inflation, up 28 percent year-on-year and energy-related costs, up 46 percent from a year ago, the company said in a statement.

Costs related to the expansion of the company's network infrastructure in the first six months rose 49 percent and also had an impact on the bottom line, it said.

"Revenue growth was mitigated due to tariff reductions and other affordability enhancement strategies adopted by the company during Q4 2007."

The company reduced tariffs to encourage its customers to increase the use of mobile phones amid high inflation and declining consumer spending power.

The company had earlier said renewed fighting between the state and Tamil Tiger rebels has led to a drop in tourism, which in turn has affected roaming revenues.

Business has also suffered from the military switching off sections of the network in conflict areas from time to time.

Analysts had expected a 30-40 percent drop in net profit. "This is much worse than we expected," analyst Vajira Premawardhena said.

"This is going to hit the overall market as Dialog is the market heavyweight at present."

The company's shares, which make up more than 13 percent or 105.9 billion rupees ($984 million) of the market capitalisation, ended flat before the release.

With more than 4.8 million subscribers, Dialog has over 50 percent of Sri Lanka's mobile market.

Rivals include Sri Lanka Telecom Ltd.'s SLTL.CM Mobitel, Hutchison Telecommunications International Ltd. (2332.HK) and Millicom International Cellular SA (MICC.O), while Bharti Airtel (BRTI.NS) is to start operation by end this year. (Reporting by Shihar Aneez; Editing by Paul Bolding)