Worldcall Telecom Limited (PSX: WTL) is a public limited company incorporated in Pakistan in 2001. WTL commenced its operations in 2004. The company provides Wireless Local Loop (WLL) and Long Distance and International (LDI) services in Pakistan. Besides, the company is also engaged in re-broadcasting international/national satellite/terrestrial wireless and cable television and radio signals, interactive communication and to develop, maintain and operate licensed telephony services.
Pattern of Shareholding
As of December 31, 2022, WTL has a total of 3.7 billion shares outstanding which are held by 30535 shareholders. Local general public, with a share of 54.46 percent in WTL’s outstanding shares is the biggest shareholder group of the company. This is followed by Associated companies, undertakings and related parties which include Worldcall Services (Pvt.) Limited and Ferret Consulting F.Z.C which collectively hold 30.22 percent shares of WTL. Foreign general public has the stake of 7.8 percent in the company followed by joint stock companies holding 6.42 percent shares of WTL. The remaining shares are held by other categories of shareholders each having a stake of less than 1 percent in the outstanding shares of WTL.
Performance Trail (2018-22)
Except for a marginal rise in 2022, the topline of WTL has been deteriorating in all the years under consideration. The bottomline has never showed a positive figure after 2019. 2021 appears to be the most difficult year for WTL whereby not only the magnitude of topline plunge is the highest among all the years but the net losses have also peaked. The margins also show their ugliest picture in 2021. The circumstance slightly improved in 2022, however, couldn’t push the company out of the loss zone.
In 2019, WTL’s topline shrank by 12 percent which came on the back of lower revenue across the categories – telecom, broadband and others. The drop in interconnect, settlement and other charges also pushed the direct cost down by 23 percent year-on-year. Operating cost also plunged by 19 percent in 2019 due to rightsizing of human resources which drove the salaries and wages down. While direct cost and operating cost provided some relief, other expense massively grew as the company booked provisions for expected credit losses on long-term receivables. The provisions for expected credit losses on trade debt also almost doubled during the year. This pushed the other expense up by 102 percent in 2019. Other income didn’t prove to be favorable as it inched down by 27 percent year-on-year in 2019. The result was a 20 percent drop in EBITDA in 2019 while EBITDA margin also tumbled from 44 percent in 2018 to 44 percent in 2019. High depreciation charge and finance cost resulted in a loss before tax of Rs201.58 million in 2019 versus a profit before tax of Rs562.28 million in 2018. However, tax adjustments resulted in a positive bottomline of Rs65.49 million in 2019, showcasing a drop of 85 percent from last year. NP margin also slid from 10 percent in 2018 to 2 percent in 2019. EPS stood at Rs0.02 in 2019 versus Rs0.09 in 2020.
In 2020, the revenue further plunged by 19 percent which came on the back of massive plunge in broadband services, followed by telecom services. Direct cost and operating cost also contracted in 2020. Other expense dipped on account of lesser provision booked in 2020 while other income also nosedived due to impact of IFRS 9 as well as lesser write-offs during the year. Despite rigorous cost saving, EBITDA ticked down by 23 percent in 2020 with EBITDA margin clocking in at 38 percent. The depreciation and amortization charges provided the much needed breather as it fell by 24 percent in 2020, however, finance cost rose by 9 percent year-on-year despite downward revisions in discount rate owing to COVID-19. Finance cost grew because of restructurings negotiated with the financial institutions and lesser liabilities written back in 2020. This resulted in a net loss of Rs.150.27 million in 2020 with a loss per share of Rs.0.06 in 2020.
2021 posted a further 33 percent decline in the topline of WTL. Consequently, direct cost and operating post also deflated. Other expense magnified by 26 percent in 2021 due to impairment of long-term investment, loss on disposal on inventory and higher provisioning for expected credit losses on trade debts. Other income posted a rather gloomy picture as it slid by 53 percent year-on-year in 2021 on account of lesser write offs during the year. EBITDA of WTL which had been positive in the earlier years under consideration turned into a loss of Rs90.15 million in 2021. Depreciation and amortization also grew by 13 percent in 2021 while finance cost gave some breather as it fell by 43 percent year-on-year in 2021. Yet the net loss magnified by over 900 percent in 2021 to clock in at Rs1506.36 million with a loss per share of Rs0.51.
In 2022, the topline showed signs of recovery as it grew by 9 percent on the back of long distance & international (LDI) with broadband segment providing added support. Direct cost grew by 6 percent in 2022 while operating cost slightly lowered as the company didn’t book provisions for advances to suppliers. Other expense also buttressed the EBITDA as loss on the disposal of inventory and impairment loss on long-term investment incurred last year were not there in 2022. Other income, however, didn’t support due to lesser reversals of provisions and lesser write-offs in 2022. EBITDA entered the positive zone in 2022, however, with a skimpy EBITDA margin of 5 percent. While depreciation and amortization almost stayed intact in 2022, finance cost grew by 25 percent, shoving the bottomline into loss zone. WTL reported a net loss of Rs.1384.98 million in 2022, 8 percent lesser than last year’s mark. Loss per share moved down by 37 percent in 2022 to clock in at Rs.0.32.
Recent Performance (1QCY23)
WTL’s revenue witnessed an 18 percent year-on-year hike in 1QCY23. Direct cost and operating cost also corresponded with the topline jump. However, record high inflation immensely increased the direct cost as a proportion of revenue from 60.3 percent in 1QCY22 to 87.6 percent in 1QCY23. Other income slid by 59 percent year-on-year while other expense turned out to be favorable and slipped by 23 percent in 1QCY23. Massive rise is direct cost resulted in the loss before interest, depreciation and amortization worth Rs128.45 million in 1QCY23 as against the EBITDA of Rs17.12 million during the same period last year. While depreciation and amortization stayed almost the same, finance cost grew by 19 percent as discount rate underwent upward revisions during the year. The net loss amplified by 40 percent year-on-year in 1QCY23 to clock in at Rs546.16 million with a loss per share of Rs.0.14 as against the loss per share of Rs.0.12 during the same period last year.
Future Outlook
With multiple projects in pipeline such as blockchain deployment, fiber to home deployment in urban areas and strategic alliance with World Mobile Group (WMG), the topline of WTL may show some improvement in the coming times; however, with unabated rise in direct cost as well as finance cost, the margins and bottomline have a depressing outlook.
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