PTCL''''s first half profit down by 23 percent

17 Mar, 2007

The Pakistan Telecommunication Limited''''s (PTCL) net profit dipped by 23 percent over the corresponding period''''s net earnings and EPS owing to rapidly declining market tariffs and reduced prices because of high competition.
The company announced net profit of Rs 8.4 billion translating into an EPS of Rs 1.64 for the first half of 2007, a decline of 23 percent over the corresponding period''''s net earnings and EPS of Rs 10.8 billion and Rs 2.12 respectively. The major factor for the decline in the top line was six percent downfall in the revenues from Rs 34.9 billion in first half of 2006 to Rs 32.7 billion in IH/FY07 owing to rapidly declining market tariffs.
The domestic revenue stood at Rs 30 billion in 1H/FY07 as against Rs 31.4 billion in the corresponding period last year whereas the NWD revenue declined by 35 percent due to 19 percent and one percent shortfall in the international incoming calls and outgoing calls respectively. However, the domestic leased line revenue witnessed a healthy growth of 42 percent on the back of countrywide expansion of the network.
The non-operating income was the main supporter to the bottom line growth as it increased by 51 percent from Rs 1.9 billion in 1H/FYO6 to Rs 2.9 billion in the said period, which, according to market analysts, was on the back of higher return on deposits with banks. On the expense side, the operating costs of the company grew by 14 percent on year-on-year basis to Rs 22.6 billion in 1H/FYO7 as compared to Rs 19.7 billion in 1H/FY06 due to high provisions for doubtful debts as per the policy and materialisation of technology based reforms in the period under review.
The financing cost on the other hand reduced by 55 percent over the last comparable period, thus giving little cushion to the declining profits in 1H/FY07.
The quarterly performance comparison depicts that the net earnings of PTCL declined by 38 percent to Rs 3.2 billion (EPS: Rs 0.63) in second quarter of 2007 as compared to Rs 5.2 billion (EPS: Rs 1.01) in first quarter of 2007 due to a six percent decline in revenues and 24 percent rise in the operating costs.
The non-operating income rose significantly by Rs 893 million (90 percent) whereas financial costs fell by 62 percent to Rs 40 million in 2Q/FY07. The WLL capacity of PTCL increased to 2.4 million consumers in the half year ending December 2006 and maintained its number one position as WLL CDMA operator with 0.8 million V-phone customers in the country.
The wholly owned subsidiary of PTCL, Ufone''''s profitability increased by 49.2 percent to Rs 977 million in 1H/FY07 as compared to Rs 655 million in the corresponding period last year as the company added 2.6 million customers taking the total customer base to 8.4 million users till December 2006. The company is also expanding the long distance and infrastructure side through spreading out two SEA-ME-WE submarine cables.

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