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The market leader in the telecom space continues to do well despite economic uncertainties. The Pakistan Mobile Communications Limited (referred to here as ‘Jazz’) scored a yearly topline gain of 12 percent to reach Rs55 billion in the quarter ended March 31, 2021 (as per financial results released by Veon (Jazz parent) last week). This is the highest quarterly revenue tally ever posted by Jazz.

The fruitful quarter comes after Jazz underwent a modest growth in operating revenues amidst a challenging year, with improved financials in second half of 2020 saving the year. (Jazz collected operating revenues of nearly Rs200 billion with an Ebitda of Rs99 billion in CY20). If the current growth pace is maintained for rest of 2021, the leading operator is expected to easily exceed that performance.

The key measure of Average Revenue per User (ARPU) continues to remain trapped below Rs250 per month level. During 1QCY21, ARPU came in at Rs246 per month, marginally lower than Rs247 per month in the same period last year. The management has attributed this sluggishness to “overall softness in revenues due to the impact of Covid-19”. The Jan-Mar ARPU was, however, up by 2 percent compared to Rs241 per month in the preceding quarter.

That data revenues continue to give is a good omen. Data services reached Rs20 billion in the quarter, showing a growth of 28 percent year-on-year. After all, the operator’s 4G network coverage has visibly improved. The 4G users stood at 29 million as of March 2021, up 62 percent compared to 18 million users as of March 2020. Data usage surged by 50 percent year-on-year to 4.5 GBs per user in 1QCY21.

Meanwhile, JazzCash, the leading player in the digital financial services segment, also continues to exhibit strong growth in user base and revenues. The Ebitda for the quarter saw a growth of 8 percent year-on-year to Rs25 billion. The less-than-proportional growth in Ebitda relative to topline suggests higher spending. As a result, slight erosion took place in Ebitda margin, from 46.4 percent in 1QCY20, to 44.9 percent in 1QCY21.

The capital spending was significantly up: the capex of Rs15 billion in the quarter reflects 38 percent yearly growth and 15 percent quarterly growth. Jazz is focusing its investments on extending its 4G network. As per the management, continued investments have helped 4G network’s population coverage to reach 61 percent as of March 2021, compared to 54 percent as of March 2020. Going forward, Jazz retaining its recent growth momentum is contingent on how soon Covid-19 climbs down its curve.

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