PTCL group faces troubled financial path

ISLAMABAD: PTCL group, the country’s largest tele­com conglomerate, appears to be heading down a similar troubled path as other beleaguered state-owned entities like Pakistan Steel Mills, PIA and Pakistan Railways, struggling with financial losses despite increasing revenue streams.
Like previous occasions, the recent financial results announced by the PTCL group showed a revenue increase of 15.3 per cent to Rs160.6 billion in the first nine months of the current year compared to the same period in 2023. The company attributed this strong performance to the consumer segment, particularly driven by fixed broadband, mobile data, and wholesale and business solutions.
However, the PTCL group reported a net loss of Rs15.3bn during this period.
The Pakistan government awarded the management control of PTCL to the UAE group Etisalat in 2006 as part of a $2.6bn deal to acquire a 26 per cent stake in the company. That year, the company reported a profit of Rs28bn, but a downward trend has persisted since then.
While the government of Pakistan is the owner of PTCL with 62pc shares, around 12pc is held by banks, modarabas, insurance sector and general public through stock market.
The PTCL group comprises PTCL, Ufone and Ubank, with the majority of undersea internet cables owned by PTCL. The company holds a dominant position in the internet wholesale business and also has a large presence in the retail internet and telephone sectors, including its cellular mobile network.
The PTCL group posted a net loss of Rs14.1bn in 2023 despite a revenue increase of 25.8pc compared to the previous year, totaling Rs190.6bn. This occurred even as Ufone achieved a 25.6pc growth in its revenue and U Microfinance Bank maintained strong momentum with a 76.5pc revenue growth in 2023.
The company’s statement said Ufone 4G emerged as the standout performer in the telecom industry in 2023, reporting exceptional revenue growth that surpassed all other operators. However, since Ufone is not a publicly listed company, its financial details remain undisclosed, whereas PTCL’s financial results are publicly released.
For the 12-month period in 2023, PTCL reported revenues of Rs96.26bn, with service costs at Rs76.10bn and administrative expenses amounting to Rs8.80bn. The profit after tax for PTCL in 2023 was Rs9.39bn, compared to Rs9.05bn in 2022. The losses faced by the PTCL group were primarily attributed to a significant downturn at Ufone.
Despite inquiries about the company’s ongoing financial losses, PTCL did not respond. However, a senior official indicated that the media would be updated on the issue in the next quarterly results briefing.
Analysts have raised concerns about the high administrative and financial costs of the PTCL group, which range between 8pc and 10pc of revenue generation.
“The management of PTCL should operate the company like a private sector entity, but it continues to function like any other state-owned enterprise, such as PIA, Pakistan Railways, or Pakistan Steel Mills. The only difference is that the top management of PTCL is not Pakistani,” said Nasheed Malik, a financial analyst at Topline Securities. He cautioned that, given the current operational approach, PTCL’s financial losses could further escalate following the acquisition of Telenor Pakistan.
Published in Dawn, October 27th, 2024