PTCL rings in net gain in FY10

In a market that has been experiencing an influx of telecommunication operators with a wide range of products and services, it is quite a daunting task for the countrys largest telecom operator, Pakistan Telecommunication Company Ltd, to hold a chunk of every segment it operates in.
However, by adopting a robust marketing approach and through stretching its value-added portfolio, PTCL has discovered the recipe to shield its revenue stream.
Amid shrinking fixed local line and wireless local loop subscribers, the companys growing presence in value-added segments helped amass Rs57 billion in revenues in FY10, nearly 3 percent lower from a year earlier.
Likewise, it seems that the growth in international revenue also supported the topline, which had increased by 23 percent during the first nine months of FY10.
Statistics issued by Pakistan Telecommunication Authority show that PTCLs fixed phone subscribers stood at 3.26 million in FY10, against 3.37 million subscribers in FY09, while its wireless local loop segment also saw a downward journey, nudged lower by around 5 percent.
With communication products reaching their points of saturation, among new services frontiers, telecom players are banking on the broadband segment to realize revenue growth down the line.
A rising appetite for broadband technology can be gauged from the fact that the subscriber base in Pakistan more than doubled to 0.9 million in FY10 from 0.4 million a year earlier. So far PTCL leads this race as it holds nearly 60-70 percent of the broadband market share, according to industry sources.
Furious competition in nearly every segment made it difficult for PTCL to take cuts in its selling and marketing expenditure, which increased to 3.75 percent as a percentage of revenues from around 3 percent a year earlier.
In the face of lower gross profit, PTCL managed to push up its net profit by 2 percent to Rs9.2 billion. The major boost to the bottom line came from lower administrative and general expenses on the heels of cost cutting measures adopted in the previous years.
Moreover, a better cash position and prudent utilization of funds also helped the firm swell its other operating income, while stabilization of the rupee resulted in a lower finance cost.
The many Universal Service Fund (USF) projects in the pipeline, and the companys growing capacity to sound out and respond efficiently to market needs will help PTCL keep its profitability intact.

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PTCL

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Rs (mn)                    FY10    FY09    %chg

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Revenue                  57,174   59,239    -3%

Cost of services         38,258   37,732     1%

Gross profit             18,916   21,507   -12%

Gross margin                 33%      36%   -9%

Selling & marketing exp   2,142    1,817    18%

Admin & general exp       7,223    8,935   -19%

Other operating income    5,134    4,267    20%

Finance cost                403      908   -56%

Net profit                9,294    9,151     2%

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Source: KSE Announcement

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