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Ufone will achieve a positive operating profit in the upcoming year

Pakistan Telecommunication Company Ltd. (PTC) held its analyst briefing on June 26, where the management discussed the following:

·         On consolidated basis, company posted loss of PkR15.4bn in CY23 compared to a loss of PkR10.9bn in CY22, the said decline in earnings was primarily attributable to an increase in Finance cost.

·         The company experienced a 74%YoY rise in finance costs primarily attributed to Ufone, driven by higher interest rates and currency devaluation throughout the year.

·         The topline was reported at PkR188bn in CY23, an increase of 25%YoY compared to SPLY.

·         Aggressive expansion strategy and significant Capex for the rollout of the FTTH network leads to an increase in market share and 2x YoY FTTH revenue growth. Furthermore, switching from a copper network to fibre has increased customer retention and strengthened their ability to raise prices for these services.

·         Management anticipates that Ufone will achieve a positive operating profit in the upcoming year, driven by 26%YoY growth in revenue during CY23, which outpaced the rise in operating expenses.

·         Company projects that acquiring Telenor would result in an annual increase of PkR45-50bn in EBITDA.

·         Management anticipates significant operating cost optimization following the acquisition. Further, management intends to substantially dismantle the current network infrastructure, leveraging synergies to reduce costs associated with towers in overlapping areas currently operated by Telenor and Ufone.

·         The company is optimistic about achieving profitability in the upcoming years, supported by stable currency conditions and lower borrowing costs. Management aim to reinstate dividend payouts by CY25 or CY26 potentially.

·         Company is not in AKD’s coverage.

Courtesy- AKD Research

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