PTCLHellototheFuture

Pakistan Telecommunication Company Limited

Analysis of Financial Statement

Submitted to: Mr. Munir Ahmed Submitted By: Saba Khan 2011-MBA-144

Figure1

PTCLHellototheFuture

INTRODUCTION: Pakistan Telecommunication Company Limited (PTCL) is the largest

law, the 7 year monopoly granted to PTCL started from this date. After a competitive bidding process, the mandate for financial advisory services for privatization of PTCL was awarded to Goldman Sachs International (GSI) in September 1998. To give close a support five and improve Steering

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:

coordination,

member

Committee comprising Chairman---PC, Secretary---Finance Secretary ---Communications Chairman----PTCL and Secretary---PC This was formulated to oversee the progress

PTCL was created on January 1, 1996 and took over all the business of Pakistan Telecommunication Corporation (PTC)

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 in bidding 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

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

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 &

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 Pakistan 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 31st December Telecommunication Company

Telephone Deptt. 1990-91 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. Pakistan Telecom

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,

PTCLHellototheFuture

Board of Directors Profile

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BOARD OF DIRECTORS

contributing towards policy-making at the provincial and federal levels.

Mr. Akhlaq Ahmad Tarar He works as Chairman at Pakistan

Mr.

Abdulrahim

Abdulla Abdulrahim Al 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.

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 Public

Dr. Waqar Masood Khan Dr. Waqar Masood Khan is an well-known economist with wideranging experience of both public and private sectors. He has done Ph.D in Economics and

Administration as he has been dealing with important public issues including community development, development of infrastructure and law and order. He has also been

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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

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

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

Fund (usf).

Mr. Amjad Ali Khan Mr. Amjad Ali Khan is working as the Federal Secretary Ministry of Privatisation by

Islamic Development Bank, National Bank of Pakistan, Pakistan International Airlines, PTCL and Pak-Oman Investment Company etc. Dr. Daniel Ritz Dr. Daniel Ritz was appointed as the Chief Strategy Officer for the Etisalat Group in

January 16, 2012 and Board member of PTCL. Prior to this he has served as Federal Secretary in the Ministries of Inter Provincial Coordination, Wafaqi Mohtasib and Overseas Pakistan.

He

holds

Masters

in

Business

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Administration

(MBA)

from

Punjab

Mr. Serkan Okandan Mr. Serkan Okandan has been working as Group Chief Financial Officer at Emirates

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

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

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

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

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.

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 31 st 2013 Financial Analysis

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COMPANY FINANCIAL ANALYSIS Profitability: Pakistan Telecommunication Company

Operating Cost: Inflation, devaluation of Pakistani currency, increased prices of fuel and power,

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.

government policies fluctuations and salary increments 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

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 Limited

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 is facing huge competition by telecom industry, to work in this area PTCL has U-Fone as its subsidiary. NEWS:

Telecommunication

Company

(PTCL) in the broadband sector has enabled Pakistan to be ranked among the top countries with highest growth rate in broadband 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

KSE gains 162 points on PTCL result KARACHI - Led by four-month CPI

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.

(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

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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 (PTCL). Company Limited

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