PTCL: The top line keeps on growing!

It appears that PTCL is en route to achieve its stated objectives of consolidation of operations and diversification of revenue streams. The telecom giant posted yet another quarter of top line growth during the ongoing fiscal year. During the latest quarter ending March 31, 2012, PTCL showed revenue growth of 11.3 percent and scored a net profit of Rs.1.4 billion.
The telecom giants performance during the nine months ended March 31, 2012, is a reflection of sales push and cost control measures. That the top line increased by 7.68 percent during 9MFY12; an indication that the deterioration in Voice revenues is now being more than offset by the gains emanating from non-voice segments.
PTCLs revenue streams include PSTN (fixed lines), wireless local loop, broadband, corporate business solutions, carrier services and international business (LDI). Voice segment used to be PTCLs bread and butter, but due to shifting telecom customer preferences and declining voice tariffs, the segments share in revenues came down to just over 40 percent.
Simultaneously, broadband services and corporate enterprise solutions picked up steam and now contribute roughly 20 percent and 10 percent to the revenues, respectively. The Companys press release yesterday highlighted the same; "PTCL has remained strong throughout 2011-2012 in emerging segments of Broadband in Wire-line as well as Wireless, and other corporate services".
The healthy top line during 9MFY12 was supported by the cost of services which increased in sync with the former. The COS actually declined as a percentage of revenues by 28bps to 74.2 percent during the period under review. This showed in the improvement in the gross margins and the gross profits, the latter increasing by 8.85 percent to Rs.11.39 billion.
The Companys administrative expenses seem to be in control, growing by nearly 9 percent to Rs.5.59 billion. Owing primarily to the selling and marketing expenses dropping by 63 bps to Rs.1.69 billion, the two expense heads together exhausted 16.5 percent of revenues, 17bps less than they did in 9MFY11.
The firms otherwise decent operating performance is marred by a 38.21 percent decline in other operating income. Likely absence of a dividend from its subsidiary Ufone and decreased investments could be at work here. Consequently, the operating margins plunged by 390bps to 15.14 percent.
Finally, PTCL closed its 9MFY12 books with a net profit figure of Rs.4.2 billion. The net margins continue to decline for the Company, this time by 261bps over 9MFY11. As predicted earlier, the revenue gains will continue to improve the bottom line in coming quarters as PTCL is readily diversifying its revenue streams away from the Voice business and going aggressive in segments like wireless broadband.
In Pakistans market for data services, PTCL is uniquely poised to offer bundled, high-margin telecom services. In fact, there appears to be no other company but PTCL which has the potential to become the genuinely integrated telecom services provider in Pakistan, courtesy the spectrum, networks and infrastructure available with the privately-managed company.