AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

Signifying a challenging operating environment for telecom operators, one of the country’s leading mobile network operators (MNOs) posted a large operating loss in the year that ended December 31, 2022. As per its parent’s latest financial report, Telenor Pakistan incurred nearly Rs22 billion in operating loss during CY22, compared to a healthy operating profit of Rs23 billion in the previous year. This was mainly due to the huge impairment loss booked by Telenor Group for its Pakistan entity back in 2QCY22.

Telenor Pakistan, which is the third-ranked mobile broadband player, saw some growth in the topline despite losing over a million subscribers, but it wasn’t enough to sustain profitability. While total revenues grew by 4 percent year-on-year to Rs109.9 billion in CY22, this growth was negative in real terms, as it fell well short of double-digit inflation in the economy. The average revenue per user (ARPU) improved slightly by 2 percent year-on-year to reach Rs179 per month (less than a dollar per month) in CY22.

Telenor Pakistan topline was negative 7 percent for its parent Telenor Group in its own currency (Norwegian Krone-NOK, from which PKR-based results are obtained after exchange conversion) due to PKR meltdown in the analysis period. High inflation, weak economic growth and overall instability are discouraging FDI inflows into the country, including for telecoms. As for Telenor Pakistan, its capital spending (excluding licenses & spectrum) was down 9 percent year-on-year to Rs12.4 billion in CY22.

Despite topline weakness, EBITDA growth was somewhat better at 9 percent year-on-year, reaching Rs61.3 billion in CY22 (still negative 3 percent in NOK terms due to PKR depreciation in the period). As a result, EBITDA margin (in terms of topline) increased from 53.1 percent in CY21 to 55.7 percent in CY22. However, the large operating loss, which apart from impairment loss was also contributed by high electricity and fuel prices and flood-related damages, was in sharp contrast to positive EBITDA.

Going forward, operating challenges are expected to exacerbate, as more hikes are on the cards for fuel prices, power tariffs, and interest rates after the resumption of the IMF program. Telenor Group has noted in its report that “Telenor Pakistan is still sensitive for impairment,” after noting that the “recoverable amount” of Telenor Pakistan assets was NOK 5.8 billion as of June 30, 2022. That valuation comes to roughly Rs123 billion under CY22 average exchange rate (~$450 million). There were rumors late last year that Telenor Group was looking to exit Pakistan, but the latest financial reports do not mention anything to that effect.

Comments

Comments are closed.