PTCL builds its way out of crisis

PTCL revenues didn dry up the way its subscribers base is exhausting, as it has been continuously introducing innovative offerings. The company managed to keep its top line afloat at Rs43 billion during nine month period, down by 4 percent over same period last year.
Financial results show that increase in revenue from broad band segment and other value added services prevented top line of the company from a greater fall, capturing 85 percent of the broadband market by December, while the wireless local loop business shrunk by 10 percent since the outset of the current fiscal year.
In the face of lower gross profit margin which reduced by 2 percentage points to 35 percent, the companys bottom line registered 9 percent growth, supported mainly by higher other operating income-- probably stemming from higher return on bank placements and interest earned on loans to its subsidiary, Ufone.
Moreover, operational efficiencies measures adopted in the last few years have started bearing fruits. Relative to sales, administrative and general expenses improved by 2 percentage points while finance costs also plunged by 63 percent, likely due to lower exchange losses and bank charges.
The thirst for high speed internet access has paved the way for the industry subscriber base to double in the current fiscal year, up to almost 700,000 subscriptions. Lower penetration ratio has provided ample room for PTCL to generate a smooth and increasing revenue income stream from this business line.
On the other hand, the company is busily increasing its service portfolio. It recently introduced tele-presence, a video conferencing tool amongst many others
Collaborations with organizations to further their technology foot print is set to chart the future course of the company. Working with NBP to setup the largest financial network and with the HEC to provide seamless connectivity to universities should mitigate the impact of falling revenues from traditional voice segments.
PTCL offered a cash payout of Rs1.75 per share, which was higher than market expectations. The companys shares at the local bourse ended the day 2.6 percent higher despite overall decline in the market.

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PTCL P&L

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Rs (mn)                     3QFY10      3QFY09        %chg

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Revenue                     43,119      45,020         -4%

Cost of services            27,883      28,187         -1%

Gross profit                15,236      16,833         -9%

Gross margin                   35%         37%         -5%

Admin & general  exp         5,333       6,431        -17%

Selling & marketing exp      1,439       1,326          9%

Other operating income       3,923       2,963         32%

Finance cost                   343         912        -62%

Net profit                   7,860       7,223          9%

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Source: KSE notice