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Another quarter, even better bottomline. As per latest results sent to the bourse for the quarter ended September 30, 2020, Pakistan Telecommunications Co. Limited Group (PSX: PTC) has achieved a massive expansion in its group net profits for 3QCY20. The marginal improvement in consolidated topline has expanded to such gains down the P&L owing mainly to lower operating expenses and finance costs.

Recall that back in the second quarter – which was a period of coronavirus-forced lockdowns and associated slump in economic activities – the PTCL Group had fared well by returning to net profits despite a 5 percent topline decline, mainly on account of sharply lower finance costs due to debt moratorium. Now a strong third quarter performance makes the group confident heading into year end.

The quarterly topline gain is better in quality than before. The PTCL company, which provided 55 percent to the net revenues, had almost the same revenues as 3QCY19 – a source of stability, given that topline fell by 1.5 percent year-on-year in Corona quarter. The Company has reported healthy performance in nearly all the revenue segments, including broadband, wholesale, and corporate business.

Meanwhile, the group topline growth is driven by subsidiaries, Ufone and UBank. While UBank continues to deliver double-digit sales growth in banking revenues, it appears that topline decline at Ufone, which was recorded in double digits in the corona quarter, has been reversed to a great degree in latest quarter. At Ufone, the yearly impact of loss of “service fee” in summer of 2019 may also have leveled off.

The two subsidiaries collectively also had a big role in expanding the group operating profits in the quarter under review. The duo together had scored an operating loss of about Rs277 million in 3QCY19 – this has been reversed to an operating profit of Rs1 billion in the same quarter this year. The subsidiaries had been a source of about Rs100 million of operating loss and a Rs1 billion of net loss in previous quarter.

Meanwhile, the PTCL Company delivered a 3 percent yearly growth in operating profits to Rs1.1 billion, thanks to lower admin expenses, selling expenses, and expenses booked as impairment loss on trade debts & contract assets. The administrative expenses at the two subsidiaries, collectively, came in a lot higher, as opposed to cost control at work at the PTCL Company.

In the end, the group saw its net profits more than quadruple in 3QCY20, thanks mainly to the two subsidiaries ringing in a profitable quarter even as PTCL Company saw its net profits decline by 18 percent in the quarter. Going forward, the recovery in Ufone financials will be a source of strength for the group, even as UBank delivers strong revenue growth up the line.