PTCL: good start to 2021

A telecom giant has started the year with its momentum intact. In the first quarter ended March 31, 2021, the Pakistan Telecommunications Co. Limited (PSX: PTC) Group improved its bottomline by almost 500 percent compared to the same period last year. Decent topline growth, controlled spending and reduced impairment-related losses have set up the group nicely for what appears to be a strong year ahead.

After withstanding the pandemic’s effects, the group has been on a growth path since the Jul-Sep 2020 quarter. Now in the Jan-Mar quarter of 2021, there is further amelioration in financials. Breaking down the group results into subsidiaries, the PTCL Company, which continued to provide roughly 56 percent of group topline, witnessed its revenues grow by 7 percent year-on-year in 1QCY21 to Rs19 billion.

This is a continuation of the trend seen in the previous quarter ended December 2020 when the fixed-line behemoth had managed to grow its topline by 4 percent. The management has attributed the latest quarterly growth mainly to 12 percent growth each in fixed broadband and corporate business, 11 percent growth in wireless broadband services, and 13.5 percent growth in carrier business (wholesale services for other operators). These segments’ growth more than compensated for the downturn in voice business.

The two subsidiaries – Ufone and UBank – also came through for the group in the first quarter. Collectively, the duo provided Rs15 billion in revenues, which were 6 percent or a billion rupee more than what they scored together in 1QCY20. The growth is driven entirely by UBank, as this DFS player has been making steady inroads in the sector. UBank quarterly revenues were up by 26.5 percent year-on-year, whereas Ufone revenues were “stable,” as per the PTCL management.

The group operating profits swelled by nearly 300 percent year-on-year in the quarter under review. Bulk of that gain is attributable to the PTCL Company, which raised its operating profits by 433 percent to Rs1.55 billion. The two subsidiaries cumulatively turned in operating profits worth Rs820 million, up 160 percent year-on-year. Cost optimization measures have been paying off.

In the end, the group returned a sizable net profit worth Rs1.6 billion, as opposed to a net loss of Rs407 million in the year-ago period. The PTCL Company was the main profitability source for the group, scoring a bottomline of Rs1.7 billion with a yearly increase of 43 percent. The two subsidiaries helped in that their combined net loss was reduced from Rs1.6 billion in 1QCY20 to Rs121 million in 1QCY21. So far, so good. For momentum to continue, topline growth will need to be sustained in the uncertain months ahead.