Pakistan Telecommunication Company Limited (PTCL) has announced its much-anticipated financial result for the October-December 2012 quarter today. It has announced an after-tax profit of Rs8.611 billion, translating into earnings per share (EPS) of Rs1.69. The profit follows a loss of Rs9.354 billion in the preceding quarter. Contrary to market expectations, PTCL has not announced a cash dividend.
The significant upswing in the company’s profitability as compared to the sizeable loss in the preceding quarter is explained by the one-off charge recorded by the company in the July-September quarter for a generous Rs10.998 billion voluntary separation scheme (VSS). PTCL paid out roughly 70 paisas for ever rupee earned by the company during that period.
A note issued by analyst Furqan Ayub from the Research division of JS Global says VSS-related tax savings amounted to Rs0.65 per share in the period under review, while a Rs1.531 billion reversal of the expense recorded in the preceding quarter added Rs0.3 per share to the profits.
Another major factor contributing to the company’s profits was the increase in termination rates for international incoming calls, following the abortive attempt to implement an international clearing house (ICH).
Under the ICH, all incoming international traffic had to be handled through a centralised gateway, which was supposed to be operated and maintained by PTCL. Long-distance international operators had to share revenues for international incoming traffic based on their respective market share with fixed termination charges.
When ICH became effective on October 1, the calling rates for overseas Pakistanis rose phenomenally – almost two to three times, according to some accounts.
However, the Pakistan Telecommunication Authority withdrew the directive in the wake of Lahore High Court’s order, which directed the telecom regulator to suspend the formation of the ICH which, according to the petitioner, Brain Telecommunication, was a violation of competition rules.
The cumulative loss per share of the company for the half year from July to December has come down to Rs0.15 per share.
Revenues earned by the company increased by a healthy 37% over the preceding quarter, while the cost of services provided stayed more or less constant, increasing by only 1%. This translated into a staggering 165% surge in gross profits.
Meanwhile, administrative expenses increased 21% in the quarter, couple with a 13% rise in selling and marketing expenses. Its finance costs increased 223% to touch Rs104 million, while tax expenses declined by a staggering 717%.
Published in The Express Tribune, February 14th, 2013.
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