Pakistan Telecommunication Company – a review of performance

PTC Group (Holding company) is composed of PTCL (fixed line, broadband and other telecom services) and three wholly owned subsidiaries namely Ufone, Ubank and DVcom that provide telecommunication, financial and broadband internet services in Pakistan.

Ufone is a cellular service provider and was among the first telecom operators in Pakistan to provide 3G services. It has international roaming facility and coverage in more than 10,000 locations as well as a mobile financial services wing. Ubank on the other hand, is also a wholly owned subsidiary providing Microfinance (micro loans, deposit products) and Branchless (Bill payments, Money transfers) banking services with a network of over 201 branches, c.840,000 deposit customers and c.314,000 loan customers.

PTC derives its revenue from three key segments, namely retail, corporate and wholesale. The retail segment comprises Wire line, Voice and Wireless data services. The company acts as the backbone of telecom services within the country by providing wholesale services based on IP gateway, bandwidth and other line services where the key clients include Jazz, Zong, Telenor, Wi-tribe etc.

The company has bouquet of services that fall under the corporate sector ranging from Banking to Health and Education. It provides vertical, cloud and business connectivity solutions by working alongside partners such as IBM, Huawei, and Microsoft.

In terms of technological infrastructure, PTC has 3,000 BTS sites, 6,200 MSAGs, 49,600km fiber network and 333 NGN exchanges. Majority of PTC’s shareholding is vested with GoP; whereas Etisalat holds 26% stake alongwith management control.

Key result highlights CY19:

PTC posted a consolidated CY19 NPAT of PKR 2,377mn (EPS: PKR0.47) down by 58% yoy, compared to NPAT of PKR 5,710mn (EPS: PKR1.12) during CY18. On a standalone basis, NPAT clocked in at PKR6,347mn (EPS: PKR1.24) down 15% yoy from PKR7,422mn (EPS: PKR1.46).

Topline grew by 2.1% yoy for the group where all operating companies contributed to the growth. Ufone’s revenue grew by 0.8% yoy, where subscriber base crossed 23mn with a net addition of 1.8mn, whereas Ubank witnessed a revenue growth of 48% yoy backed by an increase in deposit base of 13% and loan base by 27%. 60 new additional branches were also added, taking the tally to 201 branches.

On a standalone basis, PTC’s revenue grew by 0.4% yoy. Wireline data grew by 5% yoy whereas wireless data and voice declined by 31% and 12% yoy, respectively. Corporate & Wholesale witnessed a 13% yoy increase in CY19; however, retail dropped 3% yoy. Fiber to the home (FTHH) observed a 172% yoy growth in revenue due to a rise in subscriber base.

The company has been investing in upgrading delivery of its retail services as can be seen through its fixed assets, which have surged by PKR10bn, whereas cash and equivalents have also gone down from PKR9.5bn to PKR4.1bn during CY19. The company also witnessed improved operating cash flows due to a change from advance tax structure to a group tax arrangement, which has yielded apparent benefits.

Covid-19 has led to an increase in data rate; however, the data packages are such that they don’t allow growth in data to be monetized due to higher usage limits, as can be observed from data revenue which has declined by 10% yoy during 1QCY20.

PTC has a wide multi-path and diversified submarine network for International connectivity with a total capacity of 2,820Tbps alongside multiple routes. It has three existing submarine cables and is working on a new cable from Africa AAE-1, which would help in expanding its footprint. (Intermarket Securities Limited)

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