The second-ranked mobile network operators (MNO) has lately registered improved operating profitability amidst single-digit topline growth. Latest financial results for Telenor Pakistan, announced recently by its parent Telenor Group, show that revenues had reached Rs26.7 billion in the quarter ended September 30, 2021, a year-on-year growth of nearly 6 percent. However, the operating profit managed to increase by a more-than-proportional 16 percent year-on-year to reach Rs5.7 billion. (PKR-based financials are derived after conversion from reported data in Norwegian Krone).
From the topline standpoint, the latest quarter follows a similar tune to the first half of the ongoing calendar year, when topline had also grown by 6 percent year-on-year. The key revenue indicator – average revenue per user (ARPU) – stood at Rs172 per month in 3QCY21, an improvement compared to Rs167 per month seen during the first half. However, the operator’s ARPU has been descending compared to previous years. There is work to do to better monetize the network.
The reprieve for the topline is mainly coming on the data front. The management reported that Telenor Pakistan’s data revenues grew by 35 percent year-on-year in the quarter. This is presumably due to the number of 4G data users continuing to improve in the subscription pie, which is still dominated by basic mobile/Internet service users. With voice and text revenues saturating, all operators are intent on attracting more data users and capturing more value from them.
Despite rising energy prices and higher marketing spending, Telenor Pakistan was able to keep its operating expenditures somewhat in check. This is manifest in EBITDA growing by almost 8 percent year-on-year in rupee terms to Rs14.1 billion, a growth that is proportionally higher than the 6 percent topline expansion in the quarter. As a result, EBITDA margin improved from 52 percent of revenues in 3QCY20 to 53 percent of revenues in 3QCY21.
Even though the operator did not participate in the NGMS spectrum auction in Pakistan during September 2021, it is spending a significant sum on expanding its network. Telenor Pakistan spent roughly Rs3 billion during the quarter under review on capital spending (excluding licenses and spectrum) – showing a yearly growth of 35 percent over 3QCY20. As the competition in the market is high in order to attract more and high-paying data customers, all operators are trying to expand their network of 4G sites.
At the end of the nine-month period, the MNO’s revenues had grown by 6 percent year-on-year to reach Rs79 billion and its operating profits had increased by 16 percent year-on-year to come to roughly Rs18 billion. At this pace, Telenor Pakistan is expected to surpass its CY20 financial performance rather easily. Still, let's wait and see what the last quarter has in store for this operator in a challenging operating environment.