A telecom giant had an impressive first quarter this calendar year. The latest financial results of the Pakistan Telecommunications Co. Limited (PSX: PTC) group were announced yesterday for the quarter ended March 31, 2019. However, the numbers may present a glass half-full, half-empty dilemma.
On the positive side, the PTCL Group’s subsidiaries – mainly Ufone and UBank – are now proving to be a source of financial comfort for the behemoth. The quarter’s 11 percent growth in consolidated top-line was driven entirely by these subsidiaries, whose revenues grew by over 27 percent year-on-year. Ufone seems to be better monetizing its 3G subscribers; the operator has now also launched its 4G services in some cities. Meanwhile, UBank’s branchless-banking revenues are also growing in a promising market.
Compared to accumulating a small operating loss in 1QCY18. The subsidiaries this quarter contributed over a billion rupees to the group’s Rs3 billion operating profits. Their collective bottom-line has shrunk its net losses from Rs811 million in 1QCY18 to Rs13 million in 1QCY19. If they keep up this pace, the ongoing quarter may lead the subsidiaries to become a net contributor to the group bottom-line as well.
On the negative side, top-line growth still eludes the group’s main breadwinner, the PTCL Company. The company’s share in the group top-line stood at 53 percent in 1QCY19, down from 59 percent in the same period last year. In the quarter under review, the king of fixed-line saw its top-line go down by 0.6 percent year-on-year. Due to rising cost of services, the company, however, underwent a larger, 13.5 percent drop in the operating profits.
Slight decline in the PTCL Co. top-line means that it’s still a draw between two competing forces – growing revenues streams (mainly DSL broadband & Charji devices) and declining revenue streams (mainly voice & LDI business). The ambitious Network Transformation Programme, which was launched under previous PTCL CEO, needs to continue if the Company is to improve its quality of service in the growing segments.
In the end, a significant jump in ‘other income’ – presumably driven by income from non-financial assets – helped the PTCL Company record a healthy, 10 percent yearly growth in net profits for the quarter. All Rs2 billion of those net profits went on to account for the entirety of the group’s bottom-line in the quarter.
The PTCL group’s net profit, having doubled in 1QCY19, is in good shape for the year ahead. Subsidiaries are providing stability and the flagship still has opportunities to up its game. Over at the bourse, however, the group’s performance hasn’t been convincing enough for shareholders. Under-performing the broader index, the PTCL stock, which has lately been trading below Rs10 per share, is down almost 30 percent in the last 52 weeks. Can the new CEO inspire confidence in the market?
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