ptcl financial analysis

5/28/2018 PTCL Financial Analysis

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PTCLHellototheFuture

Pakistan Telecommunication

Company Limited

Analysis of Financial Statement

Figure1

Submitted to:

Mr. Munir Ahmed

Submitted By:

Saba Khan

2011-MBA-144


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INTRODUCTION:

Pakistan Telecommunication Company

Limited (PTCL) is the largest

telecommunication company in Pakistan.This company provides telephony services to

the nation and still holds the status of

backbone for country's telecommunication

infrastructure despite arrival of a dozen other

telecoms including telecom giants like

Telenor, Mobilink and China Mobile. The

Government of Pakistan sold 26% shares

and control of the company to Etisalat in

2006. The Government of Pakistan retained

62% of the shares while the remaining 12%

are held by the general public.

HISTORY OF PTCL:

PTCL was created on January 1, 1996 and

took over all the business of Pakistan

Telecommunication Corporation (PTC)

minus about 5% of the assets and much of the

Government business which went to National

Telecommunication Corporation (NTC). The

carving out of NTC from PTCL was

performed in response to the national security

concerns, although it was indeed a very sole

organization. A small no of the assets and

employees were also transferred to PTA,

FAB and PTET. PTC stands effectively

dissolved from January 1, 1996. Under the

law, the 7 year monopoly granted to PTCL

started from this date.

After a competitive bidding process, the

mandate for financial advisory services forprivatization of PTCL was awarded to

Goldman Sachs International (GSI) in

September 1998.

To give close support and improve

coordination, a five member Steering

Committee comprising

Chairman---PC,

Secretary---Finance

Secretary ---Communications

Chairman----PTCL and

Secretary---PC

This was formulated to oversee the progress

of the transaction. The Special Secretary ---

Finance was later also co-opted as member of

the Committee. Other members co-opted for

specific meetings included the Chairman

PTA.

PRIVITIZATION:

PTCL privatization took place on June 18,

2005 when 26 percent shares were sold inbidding to Etisalat at Rs. 117 per share. They

were supposed to deposit 90 percent

remaining amount of 2.25billion dollars by

8th August 2005 to take over

the management of PTCL. After that they


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have defaulted the contract and it have not

been cancelled by GoP. So Gen Musharraf

and Shaukat Aziz intervened and the PTCL

was handed over on April 12, 2006 a strategic

asset of Pakistan that was earning huge profit

to pay back remaining amount in 5 years thus

introducing a unique phenomenon in this

country Pay as you earn

The point to understand is how could

government handover administrative control

of costly asset like PTCL to a party holding

26 percent shares (12% held with public)

when the government holding is 62 %. This

is a major flaw in the sale of PTCL and

cannot be justified as you require minimum

51% shares to have administrative control.

HISTORICAL BACKGROUND:

1947 Posts & Telegraph Deptt

established.

1961 Pakistan Telegraph &

Telephone Deptt.

1990-91 Pakistan Telecom

Corporation.

1996 About 5% of PTC assets

transferred to PTA, FAB & NTC.

1996 PTCL Formed listed on all

Stock Exchanges of Pakistan.

1998 Mobile (Ufone) & Internet (Pak

Net) subsidiaries established.

2000 Telecom Policy Finalized.

2003 Telecom Deregulation Policy

Announced.

2005 Etisalat Took Over PTCL.

ORGANIZATIONAL REVIEW:

The Memorandum of Association of the

Company entails the following basic

features as by Companys Ordinance, 1984.

NAME OF THE COMPANY


Limited

REGISTERED OFFICE

Block-E, Corporate Headquarters, G-8/4,

Islamabad-44000 Pakistan

Tel:

+92-51-2263732

and 34

Fax:+92-51-2263733

FINANCIAL YEAR ENDED

31stDecember

COMPANY AUDITORS

As required by the Companies Ordinance

1984, M/s Auditors of the Company are

F. Ferguson & Co., Chartered

Accountants: It is a member firm of the PwC

network operating in Pakistan.

Address:

PIA Building, 3rd Floor, 49 Blue Area,


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Board of Direct

Pro


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BOARD OF DIRECTORS

Mr. Akhlaq Ahmad

Tarar

He works as Chairman

at Pakistan

Telecommunication

Company Limited.

Mr. Akhlaq Ahmad Tarar, Federal Secretary

for Information Technology has previously

served as the Federal Secretary, Ministry of

Science and Technology.

Mr. Tarar has an excellent academic

background. He received his early education

from the Government College University,

Lahore, Pakistan, and later acquired his

Bachelor's degree in Law from the University

of the Punjab. He did his Masters in

Administrative Sciences from the George

Washington University, USA.

Mr. Tarar has been working on various

administrative positions since he joined the

Civil Services of Pakistan in the District

Management Group in 1980. Apart from his

district-level administrative engagements, he

has a vast experience in PublicAdministration as he has been dealing with

important public issues including community

development, development of infrastructure

and law and order. He has also been

contributing towards policy-making at the

provincial and federal levels.

Mr. Abdulrahim

Abdulla AbdulrahimAl Nooryani

He is member PTCL

Board and Chairman

and Chief Executive

Officer

Etisalat International Pakistan L.L.C. Mr. Al

Nooryani joined the corporation as a

Graduate Trainee in 1979 and over the years,

taken on new responsibilities and roles. He

took the role of Executive Vice President of

Contracts & Administration in 1999. With

vast experience at hand Mr. Al Nooryani

headed the negotiation team in the Pakistan

Telecommunications Company Limited in

2005 and subsequently was appointed as the

Chairman and CEO of Etisalat Pakistan

International, which oversees the investment

of the abovementioned venture.

Dr. Waqar Masood

Khan

Dr. Waqar Masood

Khan is an well-known

economist with wide-

ranging experience of both public and private

sectors. He has done Ph.D in Economics and


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M.A. in Political Economy from Boston

University Massachusetts, USA and has done

M.A. in Economics and L.L.B. from

University of Karachi.

Now, he is serving as Federal Secretary for

Finance Division. Prior to this, Dr. Khan has

held several significant positions in the

Federal Government including Special

Secretary to the Prime Minister, Secretary

Finance Division, Secretary Economic

Affairs Division, Secretary Petroleum &Natural Resources and Secretary Textile

Industry. He also has the experience of

teaching macroeconomics at graduate level at

Pakistan Institute of Development

Economics (PIDE).

Apart from having several institutional and

personal publications to his credit, he has

served on the Boards of important national

and international institutions including

Islamic Development Bank, National Bank

of Pakistan, Pakistan International Airlines,

PTCLand Pak-Oman Investment Company

etc.

Dr. Daniel Ritz

Dr. Daniel Ritz was

appointed as the Chief

Strategy Officer for

the Etisalat Group in

February 2012. Daniel Ritz holds a Ph.D.

(magna cum laude) from the Hochschule St.

Gallen in Switzerland and was a visiting

Ph.D student at Harvard Business School. In

1994, he was awarded a Scholarship from the

National Science Foundation in Switzerland

for management studies abroad. Presently he

is the Board member of Thuraya

Telecommunications Company and PTCL

Pakistan.

Mr. Yasir Qadir

He is working as a

Member of Telecom

(PTCL) in Ministry of

Information

Technology and he is

also Board member of Universal Service

Fund (usf).

Mr. Amjad Ali Khan

Mr. Amjad Ali Khan is

working as the Federal

Secretary Ministry of

Privatisation by

January 16, 2012 and

Board member of PTCL. Prior to this he hasserved as Federal Secretary in the Ministries

of Inter Provincial Coordination, Wafaqi

Mohtasib and Overseas Pakistan.

He holds a Masters in Business


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Administration (MBA) from Punjab

University Lahore as well as a Masters in

Public Administration (MPA) from Virginia

Commonwealth University, USA.

Mr, Amjad has also worked as Executive

Director National Vocational & Technical

Education Commission P.M Secretariat,

Director General of the Civil Services

Academy, Lahore and Board of Investment,

Secretary Home & Tribal affairs and

Education Departments, Balochistan and

Managing Director Sarhad Tourism

Corporation. Further, over the past three

decades he has served on numerous field and

secretariat assignments in the Federal and

Provincial governments.

Mr. Fadhil Mohamed

Erhama Al Ansari

Mr. Fadhil Mohamed

Erhama Al Ansari

serves as an Executive

Vice President of

Engineering of Etisalat, UAE of Pakistan

Telecommunication Co. and Chairman and

Director of Paknet Ltd. of Pakistan

Telecommunication Co. Ltd. He also Board

member of of Pakistan Telecommunication

Co. Ltd.

Mr. Serkan Okandan

Mr. Serkan Okandan

has been working as

Group Chief Financial

Officer at Emirates

Telecommunications

Corporation since January 02, 2012. He

serves as Group Chief Financial Officer of

Etisalat Misr. He began his career with

PricewaterhouseCoopers (PwC) and then

worked successively for DHL Worldwide

Express and Fritolay prior to joining

Turkcell. He has been a Director of Pakistan

Telecommunication Co. Ltd. since

September 7, 2012. Mr. Okandan graduated

of Bosphorus University, Department of

Economics.

Mr. Jamal Saif Al

Jarwan

Mr. Jamal Aljarwan

Chief Regional Officer

Asia Cluster, Etisalat

Group joined Etisalat

as Chief International Investments Officer in

2006 from Al Thuraya Satellite

Telecommunications Company. He was

appointed as the Chief Regional Officer of

the Asian cluster of EG in October 2011 after

serving as its Head of Asia Operations. Mr.


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Al Jarwan is a member of the Board of

Etisalat Afghanistan, Etisalat Sri Lanka,

PTCL and Ufone. He holds a Bachelor's

degree in Business from Dayton University

in the United States and an MBA in

International Management Development

from Lausanne University, Switzerland.

Ms. Farah Qamar

She is working as a

company secretary of

PTCL and also the

member of Board of

Directors.


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For the year end December 31st 2

Financial Anal


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COMPANY FINANCIAL ANALYSIS

Profitability:


Limited (PTCL) almost doubled its profits

during financial year 2013 as its year ended

result is announced on Sunday February 2,

2014 in Abu Dhabi (UAE). PTCLs after-tax

profit increased to a surprising Rs15.75

billion or Rs3.09 per share for the year ending

December 2013, according to Official

Financial report sent to the Karachi Stock

Exchange on Monday February 4, 2014. This

shows to an increase of 89% compared with

Rs. 8.35 billion PTCL earned during

financial year 2012.

Revenues & Gross Profit:

The PTCL earned Rs131 billion in sales

during 2013, up 7% from its 2012 revenues

that stood at Rs122 billion. The key reasons

for the strong growth this year include a 7%

year-on-year jump in the revenues largely

due to higher rates on international incoming

calls as said in Tribune Express. The gross

profit margin of current year is 37% which is

slightly high to last year which was recorded

as 32%. The gross profit of the year 2013

increase by 23% which is stands at 48.15

billion as compared to previous year 39.2

billion.

Operating Cost:

Inflation, devaluation of Pakistani currency,

increased prices of fuel and power,

government policies fluctuations and salaryincrements were main factors to increase the

overall operating expenses is not much

increased as compared to last year. The cost

of service Rs. 83 billion remains same

almost. The administrative and general

expense Rs. 17.5 billion grew by 10% as

compared to 2012. The marketing and selling

expense at 8.7 billion for the year 2013 under

review increased by 28% which is essential

to meet the new era requirement and to

compete in industry.

VSS:

The voluntary separation scheme announced

by PTCL in 2012 is the main reason of

expense incurred in last year. The amount of

Rs. 9.4 billion is paid to employees under this

scheme and profit of December 6 month 2012

has negative impact because of this. It is the

43% of total operating expense of 2012

December six month and 29% of 18 month

December 2012.

Income Tax:The EBIT is Rs. 23.7 billion which grew

82% as Rs. 10.6 billion. So the rate of Income

tax paid by PTCL is 34%.


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INDUSTRY OVER VIEW

Fixed-line telecommunication is any

telephone system that does not involve

wireless transmission. This is the traditional

form of telephone service that dominated

telecommunications before the advent of

mobile cellular telephone networks. Where

the telecommunications infrastructure is

required to be in place, the most common

option is the fixed-line service. PTCL is the

major player of this industry and the oldest

organization. It has started many wireless

services from past years which makes PTCL

chief revenue generating company in the

industry. The overall industry is going in loss

like other companies Wateen, Telecard and

WorldCall telecom is not generating any

profit and in this situation PTCL surprisingly

glowing by earning Rs. 15.7 billion. PTCL isfacing huge competition by telecom industry,

to work in this area PTCL has U-Fone as its

subsidiary.

NEWS:

KSE gains 162 points on PTCL result

KARACHI - Led by four-month CPI(inflation) figure, the market rallied by 162

points to close at 26,946 levels with high

participation as volumes reached Rs11.2b.

Asad Siddiqui expert at Topline Securities,

said better than expected result from PTC

coupled with impressive dividend kept

investors interest high in the scrip, interest

was seen in Engro, PSO, POL and NML

amongst others.

PTCL joins world ranking in broadband

sector

The exponential growth of Pakistan

Telecommunication Company Limited

(PTCL) in the broadband sector has enabled

Pakistan to be ranked among the top

countries with highest growth rate inbroadband internet.

PTCL inks agreement to build largest

submarine cable system

Islamabad: Pakistan Telecommunication

Company Limited (PTCL), the largest ICT

service provider in Pakistan, is investing in

one of the largest international submarine

cable consortium system, in collaboration

with the leading telecom operators of the

world.

High point for PTCL

Latest financials show that the leading

telecom operator closed CY13 on a high,

posting spectacular revenues on the top and

huge profits at the bottom of its income

statement. The top line showed a nearly 20

percent year-on-year growth to reach Rs81

billion in CY13.


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Etisalat Rejects Offer to Settle Dispute

with Pakistani Government

UAE based Etisalat is reported to have turned

down an offer from the Pakistan government

to resolve a dispute over property transfers

dating back to its 2006 investment in Pakistan

Telecommunication Company Limited

(PTCL).

REFRENCES:

pakobserver.net

www.privitisation.gov.pk/telecom

www.businessweek.com

www.finance.gov.pk

www.telecomtrigger.com

www.usf.org.pk

www.brecorder.com

ptcl financial analysis

Documents

ptcl privatization

history of ptcl

ptcl andsecretary

management of ptcl

sale of ptcl andcannot

thegovernment of pakistan

strategicasset of pakistan

pakistan telecomcorporation