ANL 22.66 Decreased By ▼ -0.44 (-1.9%)
ASC 15.87 Decreased By ▼ -0.23 (-1.43%)
ASL 21.99 Decreased By ▼ -0.26 (-1.17%)
BOP 8.50 Decreased By ▼ -0.05 (-0.58%)
BYCO 8.82 Decreased By ▼ -0.14 (-1.56%)
FCCL 17.71 Decreased By ▼ -0.36 (-1.99%)
FFBL 24.26 Decreased By ▼ -0.19 (-0.78%)
FFL 17.75 Decreased By ▼ -0.15 (-0.84%)
FNEL 8.30 Decreased By ▼ -0.10 (-1.19%)
GGGL 21.50 Decreased By ▼ -0.59 (-2.67%)
GGL 42.21 Decreased By ▼ -0.97 (-2.25%)
HUMNL 7.06 Increased By ▲ 0.04 (0.57%)
JSCL 20.56 Decreased By ▼ -0.29 (-1.39%)
KAPCO 37.95 Increased By ▲ 0.05 (0.13%)
KEL 3.57 Decreased By ▼ -0.04 (-1.11%)
MDTL 2.90 Decreased By ▼ -0.10 (-3.33%)
MLCF 36.00 Decreased By ▼ -0.30 (-0.83%)
NETSOL 152.80 Decreased By ▼ -0.50 (-0.33%)
PACE 5.95 Decreased By ▼ -0.03 (-0.5%)
PAEL 30.95 Decreased By ▼ -0.25 (-0.8%)
PIBTL 9.27 Decreased By ▼ -0.09 (-0.96%)
POWER 7.90 No Change ▼ 0.00 (0%)
PRL 20.50 Decreased By ▼ -0.35 (-1.68%)
PTC 10.40 No Change ▼ 0.00 (0%)
SILK 1.63 Decreased By ▼ -0.04 (-2.4%)
SNGP 43.25 Increased By ▲ 0.06 (0.14%)
TELE 21.58 Decreased By ▼ -0.48 (-2.18%)
TRG 174.50 Increased By ▲ 1.00 (0.58%)
UNITY 35.77 Decreased By ▼ -0.43 (-1.19%)
WTL 3.19 Decreased By ▼ -0.06 (-1.85%)
BR100 4,945 Decreased By ▼ -33.7 (-0.68%)
BR30 24,340 Decreased By ▼ -120.41 (-0.49%)
KSE100 46,294 Decreased By ▼ -341.76 (-0.73%)
KSE30 18,312 Decreased By ▼ -168.39 (-0.91%)

Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,246
4024hr
Pakistan Cases
1,226,008
2,16724hr
4.22% positivity
Sindh
450,787
Punjab
422,790
Balochistan
32,769
Islamabad
104,242
KPK
171,388

After recording a sizable profitability slump in CY19, the local telecom giant has commenced CY20 on a loss-making note. As per its latest financial results for the quarter ended March 31, 2020, Pakistan Telecommunications Co. Limited Group (PSX: PTC) suffered a bottomline decline that was much worse than the poor showing at the top under revenues.

Breaking down the consolidated financials, the PTCL Company – which provided 56 percent of group revenues – saw its topline decline by just 1 percent year-on-year in 1QCY20. The PTCL management told BR Research that while revenue segments like wireless data, international telephony, IP bandwidth and cloud services grew on a year-on-year basis; there was a slight decline in the fixed broadband (DSL) segment as well as in voice segment due to churn and competition from OTT and cellular services.

Meanwhile, the subsidiaries – mainly Ufone and UBank – had a collective topline decline of 10 percent year-on-year, entirely due to Ufone. As per the management, Ufone’s 1QCY20 revenues were 14 percent lower year-on-year. This is mainly due to the revenue hit the cellular operator (and the sector) has absorbed on account of the loss of “service fee” on mobile top-ups which the apex court had annulled last summer.

On the other hand, UBank continues to grow its topline. The 1QCY20 revenue growth for this financial services firm stood at 44 percent year-on-year, as per the management. This is mainly due to growth in customer loans that has resulted from branch expansion activities, with 60 locations that have been added since 1QCY19.

During the period under review, the group recorded substantial impairment losses – both for PTCL Company and Ufone – which worsened the profitability profile. The increase in “impairment loss on trade debts and contract assets” has been attributed by the management to an uptick in default incidence due to higher customer churn and increase in the amount of default per customer because of the general trend of customers upgrading their monthly packages to higher-priced packages.

‘Other Income’ came to the group’s rescue, as the higher interest rates ameliorated the income on investments and the sales of redundant, obsolete assets on account of network modernization provided windfall gains. But Ufone’s substantially higher finance costs – due to the impact of rupee devaluation on the operator’s forex-denominated liabilities as well as higher cost of borrowing – wiped those gains clean.

As for profits, the PTCL Company’s bottomline declined by 40 percent year-on-year to Rs1.21 billion in the quarter under review. This decline is substantial compared to topline decline, as costs and expenses didn’t come down in tandem, due to inflationary pressures in the economy. While some degree of profitability from the main company was still as source of comfort for the group, it was the subsidiaries that firmly pushed the group into the red.

The two subsidiaries managed a combined net loss of Rs1.61 billion to plunge the group into a sizable net loss of Rs0.4 billion for the quarter. This loss – which has Ufone written all over it – is likely to intensify in subsequent quarters, as the PTCL management believes that COVID-19 may impact group operations and financials.

Being the carrier of carriers, the PTCL group is in a unique position to help Pakistan get through this crisis by keeping wholesale and retail data services up and running. Government ought to facilitate the provision of such services, considering the financial strain the sector will feel from both the demand and supply sides.

Comments

Comments are closed.