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The country’s telecom giant posted its first annual net loss on the group level since at least 2012. As per latest financials sent by the Pakistan Telecommunications Company Limited (PSX: PTC) to the bourse, the PTCL Group – which comprises PTCL Company, Ufone and UBank, mainly – closed the year ended December 31, 2022 with Rs7.78 billion in net losses. With macro and sectoral challenges expected to intensify, such a heavy loss places the Group in an unfavorable position at the start of the new year.

The Group closed in the red despite achieving double-digit topline growth and reaping the ‘other income’ windfall, as rising cost of services and steep interest on outstanding loans wiped out those gains during the year. Those challenges are being experienced by many companies in several business sectors. However, in the PTCL Group’s case, pre-existing financial vulnerabilities are at risk to be exacerbated in a tough macroeconomic climate.

The Group topline went up by 10 percent year-on-year to Rs151.64 billion in CY22 – an expansion supported by all subsidiaries. There was 9 percent yearly in revenue growth at PTCL Company to Rs83.44 billion, thanks to jump in last-mile/retail broadband services (mainly fixed broadband), long-distance and international (LDI) business, and corporate and wholesale revenue streams. Prospects are high to score big in the large serviceable market for fixed broadband – but it needs a lot of investment.

Meanwhile, Ufone posted topline growth of 7 percent year-on-year in CY22, despite a challenging market for mobile network operators where a regulatory decrease in the mobile termination rate and higher upfront taxation on prepaid account recharges affected all operators. Acquiring new 4G spectrum back in late 2021, it remains to be seen if Ufone can significantly lift its mobile broadband subscriber base. Helped also by higher interest rates, UBank raised its topline by 35 percent year-on-year in CY22.

Thanks to out-of-proportion increase in ‘cost of services’ due to rising prices of fuel, electricity and other services, the Group’s operating profits declined by 68 percent year-on-year to Rs1.63 billion in CY22. Whatever profits were posted on this count owed to the PTCL Company, whose operating profits actually increased by 17 percent year-on-year to Rs4.88 billion. But this healthy contribution to the Group financials was neutralized by Ufone and UBank collectively recording an operating loss of Rs3.24 billion.

Despite big gains under ‘other income,’ the Group posted a large after-tax loss of Rs7.78 billion, as finance costs surged to nearly Rs30 billion (which is explained, in part, by long-term loans at Ufone being exposed to multiple discount rate hikes in 2022). For the PTCL Company, net profits were sweet at Rs9 billion, growing 32 percent year-on-year. Continued PKR depreciation during much of 2022 strengthened LDI revenues, whereas long-term investments received better returns due to higher interest rates.

The Group’s net-loss in the analysis period owed to the fact that the two subsidiaries (Ufone and UBank) provided a cumulative net-loss of Rs16.84 billion, which was nearly 4 times the net-loss they posted together in 2021. The subsidiaries’ large negative contribution to the Group bottom-line was mostly due to higher net-loss recorded at Ufone. Most of the macroeconomic headwinds and sector-related factors that affected the PTCL Group in CY22 are still present, with the former expected to intensify this year and further erode operating profitability. Let’s wait and see how CY23 turns out for the telecom behemoth!


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