INTERNSHIP REPORT ON

PAKISTAN TELECOMMUNICTION
COMPANY LIMITED

MUHAMMAD ARSLAN ALI

Enrollment # 01-122081-063

Submitted in partial fulfillment of the requirements

For the degree of Master of Business

Administration

At

BAHRIA UNIVERSITY ISLAMABAD,

PAKISTAN

DECEMBER, 2010
ii
ACKNOWLEDGEMENT

First of all I am thankful to “ALMIGHTY ALLAH”. Who gave me the

strength, patience, courage and enthusiasm needed to write and
complete this report, then to my friends who assisted me in this effort
and we worked daylong to accomplish this assignment and to my
parents who supported me financially and encouraged me morally. I
have a debt of gratitude to all my teachers who taught me throughout
my academic career.
It was pleasure for me to be sent to The PTCL Headquarters G-8/4,
Islamabad. I am very thankful to the honorable internship incharge. I
learnt a lot from this training program and this would guide me a lot
while selecting my career. I also know how to face the problems and
how to find out the ways for their solutions.
The preparation of this report was the massive undertaking but the
highly competent and experienced employee of PTCL Mr. Asad Qadeer
and Mam Sumaira, provided me with all Assistance, information, Advice
and suggestion that I needed which contributed importantly to this
report.
 DEDICATION

This report is dedicated to:

Most Lovable “My GRAND FATHER & PARENTS”

EXECUTIVE SUMMARY

It is the requirement of the university for the MBA degree to complete a

eight week internship program. After completion of the internship, the
students have to submit a written report to the department.

The purpose of this study is to get experience of the real life finance
practices in order to bridge the gap between the theoretical and the
practical approaches and to gather the knowledge of the different
aspects of this vast field of profession. Besides, this report also aims to
inculcate amongst the students the method of collecting relevant
material and shaping it in the forms of formal report writing.

This report provides information about the main functions and

operations of Pakistan Telecommunication Company Limited. All the
information is gathered during on the job training in Pakistan
Telecommunication Company Limited. The information contained in this
report was mainly collected from two departments, i.e. Budgeting &
International accounts.

During my internship at PTCL, I experienced a positive and cooperative

environment which helped me in my learning. Not only I learned
different finance practices but also I came to know that how to behave
and talk with seniors, juniors and peers. I have described my experience
in detail in the 3rd chapter.

The problem I found at the PTCL is that they don’t treat their customers
that well and new services like PTCL broadband is not still producing
satisfactory results. Management is confused how to get maximum
benefit and keep on introducing and eliminating their services and
packages. During the first nine months of financial year 2007-08, total
revenue of the company was Rs. 44.0 billion, showing a decline of 9%
compared with Rs. 48.5 Billion of the same period last year. However,
revenue performance has shown a consistent growing trend from
quarter to quarter during the current fiscal year. The operating
expenses increased to Rs. 56.9 billion from 33.7 billion only because of
VSS cost impact. As a result, there was an operating loss of Rs. 13.0
billion. The non-operating income increased by 11% to Rs.3.4 billion.
The Company suffered a loss before tax of Rs. 10.0 billion for the nine
month period ended 31st March, 2008. There is a net gain in the
provision for tax amounting to Rs. 3.4 billion which reduced the net loss
to Rs. 6.6 billion. The consolidated results of PTCL group showed a
better picture as the net loss before tax amounting to Rs. 8.3 billion was
less due to positive contribution of Ufone. Excluding VSS impact, the
group would have shown a profit before tax of Rs. 14.9 billion. Moreover
reference matters more then skills and qualities of an employee.
Promotion is done on the basis of seniority and experience. It is briefly
discussed in 4th chapter.

The efforts should be made that PTCL be made independent in its

internal matters and ministry of communication may give only
guidelines. The officers must be trained to adopt the company culture,
soft spoken, good relations with customers and target oriented. Finance
and Marketing officers and Engineers may be sending to international
seminars/workshops to get knowledge of new technique and
procedures. Promotion should be made on the basis of performance
rather than seniority.
TABLE OF CONTENTS

ACKNOWLEDGEMENT....................................................................................................iii
DEDICATION......................................................................................................................iv
EXECUTIVE SUMMARY....................................................................................................v
TABLE OF CONTENTS.....................................................................................................vii
LIST OF TABLE...................................................................................................................ix
INTRODUCTION:.................................................................................................................1
HISTORY OF TELECOMMUNICATION.......................................................................1
EARLY TELECOMMUNICATIONS...........................................................................1
INTRODUCTION OF THE HOST ORGANIZATION....................................................2
COMPANY PROFILE.......................................................................................................2
PRODUCTS & SERVICES...................................................................................................8
VALUE ADDED SERVICES...........................................................................................8
QUALITY OF SERVICE...............................................................................................9
NEW PROJECTS AND SERVICES IN PIPELINE...................................................10
COMPANY ANALYSIS:....................................................................................................11
SWOT ANALYSIS OF PTCL.........................................................................................11
STRENGTHS ..............................................................................................................11
WEAKNESSES............................................................................................................12
OPPORTUNITIES.......................................................................................................14
THREATS....................................................................................................................16
FINALCIAL ANALYSIS....................................................................................................17
LIQUIDITY ANALYSIS ................................................................................................22
ACCOUNT RECEIVABLE TURNOVER .................................................................22
ACCOUNT RECEIVABLE TURNOVER IN DAYS ................................................22
WORKING CAPITAL ................................................................................................23
CURRENT RATIO AND ACID- TEST RATIO.........................................................23
CASH RATIO ...................................................................................................23
SALES TO WORKING CAPITAL.............................................................................23
PROFITABILITY ANALYSIS .......................................................................................23
TOTAL ASSET TURN OVER RATIO .....................................................................24
DUPONT RETURN ON ASSETS ..............................................................................24
OPERATING INCOME MARGIN (PERCENT)........................................................24
 OPERATING ASSET TURN OVER .........................................................................25
RETURN ON OPERATING ASSET (PERCENT).....................................................25
RETURN ON INVESTMENT (ROI) (PERCENT) ....................................................25
RETURN ON TOTAL EQUITY (PERCENT)............................................................26
INVESTOR ANALYSIS..................................................................................................26
DEGREE OF FINANCIAL LEVERAGE (TIMES)....................................................26
RATIO’S..........................................................................................................................26
LONG TERM DEBT PAYING ABILITY......................................................................28
WORKING EXPERIENCES...............................................................................................30
LEARNING IN PTCL AS A INTERNEE.......................................................................30
STRUCTURE OF BUDGET DEPARTMENT............................................................30
WORKING...................................................................................................................30
DUTIES AND RESPONSIBILITIES..........................................................................31
FINANCE DEPARTMENT.............................................................................................32
BUDGET DEPARTMENT..............................................................................................34
RECOMMENDATIONS.....................................................................................................38
CONCLUSION....................................................................................................................39
REFRENCES.......................................................................................................................40
ONLINE REFERENCES.....................................................................................................41
APPENDIX-A......................................................................................................................42
LIST OF TABLE
1. RATIO ANALYSIS……………………………………………………………….17
INTRODUCTION:

HISTORY OF TELECOMMUNICATION

The history of telecommunication began with the use of smoke signals

and drums in Africa, the Americas and parts of Asia. In the 1790s the
first fixed semaphore systems emerged in Europe however it was not
until the 1830s that electrical telecommunication systems started to
appear. This article details the history of telecommunication and the
individuals who helped make telecommunication systems what they are
today.

History of telecommunication is an important part of the larger history

of communication

EARLY TELECOMMUNICATIONS

Early telecommunications included smoke signals and drums. Drums

were used by natives in Africa, New Guinea and South America, and
smoke signals in North America and China. Contrary to what one might
think, these systems were often used to do more than merely announce
the presence of a camp.

In 1792, a French engineer, Claude Chapel built the first visual

telegraphy (or semaphore) system between Lille and Paris. This was
followed by a line from Strasbourg to Paris. In 1794, a Swedish engineer,
Abraham Decants built a quite different system from Stockholm to
Drottningholm. As opposed to Chapel’s system which involved pulleys
rotating beams of wood, Edelcrantz's system relied only upon shutters
and was therefore faster. However semaphore as a communication
system suffered from the need for skilled operators and expensive
towers often at intervals of only ten to thirty kilometers (six to nineteen
miles). As a result, the last commercial line was abandoned in 1880.

• TELEGRAPH AND TELEPHONE

 • RADIO AND TELEVISION

• COMPUTER NETWORKS AND THE INTERNET

INTRODUCTION OF THE HOST ORGANIZATION

COMPANY PROFILE

With employee strength of more than 29,500 and customers less than 6
million, PTCL is the largest telecommunications provider in Pakistan. The
company maintains a leading position in Pakistan as an infrastructure
provider to other telecom operators and corporate customers of the
country. It has the potential to be an instrumental agent in Pakistan’s
economic growth. PTCL has laid an Optical Fiber Access Network in the
major metropolitan centers of Pakistan and local loop services have
started to be modernized and upgraded from copper to an optical
network. However, the telecommunications sector has been deregulated
in recent years leading to a production of first domestic and more
recently international cellular phone providers. It is a part of the overall
strategy in the sector to privatize the public monopoly, or what is
effectively a natural monopoly.

VISION STATEMNET

“To be the leading Information and Communication Technology Service

Provider in the region by achieving customer satisfaction and
maximizing shareholders 'value'.”

MISSION STATEMENT

To achieve that vision PTCL has the following viewpoints.

• An organizational environment that fosters professionalism,

motivation and quality.

• An environment that is cost effective and quality conscious.

• Services that are based on the most optimum technology.

 • Quality and Time conscious customer service.

• Sustained growth in earnings and profitability.

CORE VALUE

• Professional Integrity

• Customer Satisfaction

• Teamwork

• Company Loyalty

HISTORY OF PTCL

Telecommunication is older than Pakistan, before the independence of

Pakistan this sector was under the Indian post and telegraph
department. Pakistan Telecommunication Corporation (PTC) set its
journey in December 1990, taking over operations and functions from
Pakistan Telephone and Telegraph Department under Pakistan
Telecommunication Corporation Act 1991. This coincided with the
Government's competitive policy, encouraging private sector
participation and resulting in award of licenses for cellular, card-
operated payphones, paging and, lately, data communication services.
Pursuing a progressive policy, the Government in 1991, announced its
plans to privatize PTCL, and in 1994 issued six million vouchers
exchangeable into 600 million shares of the PTCL in two separate
placements. Each had a par value of Rs.10 per share. These vouchers
were converted into PTCL shares in mid-1996. In 1995, Pakistan
Telecommunication (Reorganization) Ordinance formed the basis for
PTCL monopoly over basic telephony in the country. It also paved the
way for the establishment of an independent regulatory regime. The
provisions of the Ordinance were lent permanence in October 1996
through Pakistan Telecommunication (Reorganization) Act. The same
year, Pakistan Telecommunication Company Limited was formed and
listed on all stock exchanges of Pakistan. Pakistan Telecommunication
Company Limited (PTCL) was incorporated as a public limited company,
with the objective of providing domestic and international
telecommunication and related services. About 95% of the assets and
liabilities of PTC, at net book value, were transferred to PTCL whereas
the remaining 5% assets were vested in PTA, NTC etc. The vesting of
assets to new entities took place with effect from 1st January 1996.
PTCL is listed on the Karachi Stock exchange and comprises about 30%
of the weight age of the KSE 100 index. In 1995 under the Chairmanship
of Mian Javed, the PTCL in its first four years installed nearly 2 million
telephone lines, about 200 percent increase in total capacity. Today, the
number of working lines has been raised to about 2.82 million. The fixed
line telephone density is 2.2 telephones per thousand people, which is
higher than in some countries of the region. The number of telephone
lines is expected to total nearly 4 million within the next 2 years. In
addition PTCL started a very aggressive roll out of the conversion of the
old analog telecom technologies to digital telecom including installation
of Fiber Optic backbone between Karachi and Lahore in the initial
phases. The company is in process of enhancing organizational and
business proficiency through vertical integration and horizontal
diversification. At the same time, cross-national ownerships, operations
and partnerships are being evaluated with a view to developing and
diversifying the business.

With employee strength of 29500 and customers less than 6 million,

PTCL is the largest telecommunications provider in Pakistan. PTCL also
continues to be the largest CDMA operator in the country with 0.8
million V-fone customers. The company maintains a leading position in
Pakistan as an infrastructure provider to other telecom operators and
corporate customers of the country. It has the potential to be an
instrumental agent in Pakistan’s economic growth. PTCL has laid an
Optical Fiber Access Network in the major metropolitan centers of
Pakistan.

SUBSIDIARIES

U-fone
(Pakistan Telecom Mobile Ltd) a wholly owned subsidiary of PTCL
commenced its operations on 29th January 2001 as a GSM 900 service
provider. Since the beginning, it has expanded its coverage and
customer base at a rapid pace and established itself as one of the
leading cellular service providers in Pakistan. U-fone is now considered
to be one of the most active, aggressive and innovative players in the
mobile sector of Pakistan. The growth of the cellular industry is a direct
result of the successful execution of the telecom deregulation and
cellular mobile policy by the Ministry of IT and Telecommunications
(MOIT&T) and the support, guidance and timely enforcement of
regulatory process by the Pakistan Telecommunication Authority (PTA).
U-fone successfully maintains its market share of 25% by increasing its
subs to 18.5 million. During the year, U-fone successfully completed the
launching of sites under Phase V in existing as well as new cities and
towns by investing more than US$ 575 million. This has increased the
asset base of U-fone from rupees 33.5 billion to 55.9 billion. To further
enhance the subscriber base and strategically position the company in
the growing telecom market, U-fone has finalized a network expansion
for Phase VI contract amounting to about US$ 126 Million.

U-fone currently, has network coverage in more than 3,756 locations

throughout the country. U-fone's operational performance has been very
encouraging despite hard competition in Pakistan telecom market,
which has led to reduction of prices to bare minimum level. U-fone
managed to improve its revenue and operating profit by 35% and 47%
respectively, as compared to the last year through insistent policies and
exercising strict control over expenses.

PRIVATIZATION

The growth of the cellular sector in Pakistan can also be attributable to

good governance policies of the government of Pakistan and the
Privatization Commission. In April 2006, Emirates Telecommunication
Corporation, which is commonly known as Etisalat, has assumed
management control of Pakistan Telecommunication Corporation Ltd –
part of the $2.6bn deal to buy a 26% stake in PTCL. The successful
Privatization of PTCL, and consequently U-fone, is hailed as ushering in a
new era for telecommunications in Pakistan. Now, under the
management of Etisalat, U-fone will concentrate on customer needs and
benefits and is more determined than ever to be the leading cellular
player in the market. U-fone has been known for providing superb
propositions and quality service to its customers. With the new expected
investment, U-fone can now aggressively expand its network coverage.

Performance
As mobile users in the country have reached over 30 million at a very
rapid pace, U-fone has maintained itself as the 2nd largest cellular
operator in Pakistan with a subscriber base of around 6.8 million and a
market share of nearly 28%. U-fone has seen a subscriber growth rate of
over 200% in the last year, and since the start of 2005 U-fone added
nearly 5 million subscribers onto its network. Subsequently the growth
in subscriber base caused revenue to be doubled. In the recent year its
DSL services are the major contributor in its revenues.

Product and Pricing

Since the recent telecom de-regularization and the issuance of two more
GSM licenses, the Pakistan telecom market has become very
competitive and is changing at a very fast pace. U-fone once again set a
trend in the market by introducing simplified tariffs. The company has
two main product lines (prepaid and post paid) for all its valued
customers. To capture every segment of the market, U-fone has further
customized its packages. Postpaid is further differentiated into 4 plans
including a very competitive Zero Line Rent package. U-fone has
introduced a very simplified tariff structure for its customers with a flat
rate of Rs. 1/ 30 sec to any operator all over the country. Similarly U-
fone has the most competitive SMS, GPRS and MMS rates having the
lowest international SMS rate at Rs.1.50. These simplified tariff plans
and user-friendly packages have greatly helped U-fone in becoming the
fastest growing operator in the country. U-fone understands the need to
communicate effectively and efficiently at all levels of society and its
various products are catering for the needs of the Pakistan corporate
market.

International Coverage

U-fone provides International Roaming facility with more than 150

international operators across 79 countries. U-fone has GPRS roaming
agreements with several international operators and also provides
prepaid roaming facility to selective destinations.

Network Coverage

U-fone has always believed in a solid commitment to growth, security

and reliability. Therefore, U-fone has always balanced its expansion
efforts and quality of service. With a total current investment of $400
Million, U-fone has network coverage in more than 300 cities and towns
and across all major highways of the country. U-fone has been
instrumental in the growth of the cellular market in Pakistan. It is a
company committed to excellence. Under the new vision of Etisalat and
with the support and collaboration of its employees and vendors, U-fone
aspires to be the best in the market by offering customer focused
products.

Historic Background

• 1947 Posts & Telegraph Dept. established

• 1962 Pakistan Telegraph & Telephone Dept.

• 1990-91 Pakistan Telecom Corporation

• ALIS: 850,000

• Waiting list: 900,000 Expansion Program of 900,000 lines initiated

• (500,000 lines by Private Sector Participation

• 400,000 lines PTC/GOP own resources).

 • 1995 About 5 % of PTC assets transferred to PTA,FAB & NTC.

• 1996 PTCL Formed listed on all Stock Exchanges of Pakistan

• 1998 Mobile (U-fone)& Internet(PakNet)subsidiaries established

• 2000 Telecom Policy Finalized

• 2003 Telecom Deregulation Policy Announced

• 2006 Etisalat Takes Over PTCL

MONOPOLY STATUS

Pakistan Telecommunication Company Limited has monopoly over fixed

line voice telephony expires on 31s1 December 2002 and we do not
anticipate any extension. However, armed with various entry barriers to
fixed line telephony, such as large capital requirements and first mover
advantages, we believe Pakistan Telecommunication Company Limited
will not be substantially affected for several years thereafter.. Pakistan
Telecommunication Company Limited has already adopted a flexible
approach toward the private sector and has implemented BOT contracts
with private sector participation. Pakistan Telecommunication Company
Limited has latest expansion plans also envisage private sector
participation over the next two years and interest has been solicited for
installation of 270K lines. In effect, the sector is already open to
private .sector participation, though without threatening Pakistan
Telecommunication Company's monopoly as these projects function
under Pakistan Telecommunication Company Limited licenses and may
take the form of a flexible service model like franchising, sub-agency
arrangements, and small Build. Own.

PRODUCTS & SERVICES

VALUE ADDED SERVICES

Marketing department is providing value added services to its

subscribers (both individual & organizations) and aims at improving its
efficiency by offering discounts and other benefits to its subscribers.

Marketing Department is offering the following value added-services to

its subscribers.

• Toll Free Numbers.

• Universal Access Number.

• Digital Facilities. (Call transfer, call transfer on busy, call

transfer on no reply, conference call, abbreviated dialing, wake up
call, call waiting, hotline)

• Domestic and Commercial ISDN (Integrated Service Digital

Network) Service.

• Internet/E-Mail Services.

• Digital Leased Lines/Cross Connect.

• CLI Service.

ADVANTAGES OF INTEGRATED SERVICE DIGITAL NETWORK.

• High speed computer to computer data communication

• Computer based videoconference.

• Caller line identification.

• Eight times faster than fax transmission.

• High quality video communication.

QUALITY OF SERVICE

PTCL has improved considerably in this area. At present there are much
fewer complaints pertaining to dropping of calls, cross talk and wrong
dialing due to achievement of 82% digitalization of its network but there
are still some complaints like late delivery of bills and excessive billing,
poor response from 17, 18, 109 and higher faults. PTCL is taking
following measures to further improve the quality of service:

• Upgrade old Outside Plant

• Good management of digital transit/local exchanges

• Optimize optical fiber links and digital radios

• Effective monitoring and fault management

• Achieve call completion ratio of 50% inland and 55% on

international calls

• Improve response time and quality on 17, 18 &

109

• Modernize Directory service and distribution

• Expand and improve Customer Service Centers

• Create customer care culture

• Providing diversity on main arteries for National &

International circuits including leased lines to mobile operators for
interruption free service during breakdown and Universal Access
Numbers __ access to mobile networks.

NEW PROJECTS AND SERVICES IN PIPELINE

PTCL is also in the process to complete the following projects:

• Addition of 300,000 new telephones during 1999-2000.

• Replacement of 229,000 EMD lines with Digital lines in 1999-

2000.

• 160,000 Wireless Local Loop Payphones.

• Turnkey project for 275,000 lines contract with ZTE-China

Wanbao.

• Expansion of Internet service - 150,000 new connections.

• Quetta-Shikarpur Optic Fibre Cable installation work in

progress

• Global Mobile Personal Communication by Satellite (GMPCS)

 • Voice Messaging Service.

• Video Conferencing.

• Intelligent Network Platform

• Electronics/Radio Based Burglar Alarm System/Service

• Prepaid Calling Card Service for NWD Calls

• Voice Messaging Service

COMPANY ANALYSIS:

SWOT ANALYSIS OF PTCL

Strengths are positive internal characteristics that the

organization can exploit to achieve its strategic performance goals.

STRENGTHS

• Biggest Foreign Exchange Earner

PTCL is the biggest source of foreign exchange for Pakistan. It

earns a lot of foreign exchange form its international traffic and
interconnect’s revenue.

• Modern Technology

PTCL is running modern technology to develop its products and

services and improve the quality of services. In this connection it has
replaced the old exchanges with new digital exchanges. It has
computerized billing system for domestic landline customers. Due to
this technology thousand of complaints have been reduced. PTCL has
also entered in the business of Mobile phone, internet services, IPTV
(PTCL SMART TV). Its product line is continuously expending. Also it now
it has licenses of SMW3 and SMW 4, two optical fiber cables. Incase one
gets disconnected under sea; other can take its load of traffic.
 • Good Will

Good sound image is prolonged through innovation and as long as

a company has well image, its share market will be growing. It should be
remembered that even very good image, starts smelling badly without
innovation. PTCL was privatized and its shares were purchased on
higher price because PTCL is the biggest telecom company of Pakistan
and stands among higher ranks of the telecom industry of sub continent
region.

• Largest Installed Network

PTCL has the largest nationwide installed network infrastructure

capability which includes switching, transmission, fiber optic backbone,
co-location and international capacity. This provides an ample space
and unique state to offer these services on turnkey basis to the
upcoming list of carriers including Mobile, WLL (Wireless Local Loop),
ISPs (Internet Service Providers) and Resellers.

• OSS (One Stop Shop) Provider

To simplify IPLC ordering and billing, a concept called One Stop

Shopping (OSS) was developed. OSS allows an organization to place a
single order with a single carrier for two private leased circuits for two
offices in two different countries. In the past, an organization had to
contact each carrier in each country to order the two circuits, which
included two separated invoices. OSS consolidated the billing for both
circuits into a single invoice, handles all currency issues, and allows the
organization to report all problems from either circuit to one carrier.

WEAKNESSES

• Communication Barriers

There is ineffective communication between the higher and lower

staff; this is due to less qualified lower staff. During process of
restructuring many new employees with greater qualifications are
recruited. However the lower permanent employees, who either didn’t
take VSS by themselves or VSS was not applicable to them, are having
almost obsolete skills incapable for re-usage in new structure. The old
employees are not comfortable working with new employees.

• Lack of Professional Staff in Region

It is observed the offices PTCL in the region lack professional staff

and qualification and thus they can’t cope with modern and competitive
requirements of the market.

• Low Employee Work Morale

The morale of older employees is much low. The new employees

are really motivated and are well incorporated into corporate culture.
But the old employees are not motivated to work. The come late to
offices, spend most of the time chatting with colleagues, leaves office
early. It is because they consider themselves to be inferior now. A new
young, agile employee of nearly half of their age performs work better
then them and is getting their supervisor praise. They feel that their
experience, years of serving to PTCL and loyalty has gone wasted.

• Ambiguity in Strategic Direction

PTCL is doing business very well but only to that extent to which
customers respond. Though company is transforming itself to “Customer
Oriented business” and has declared this year of “Customer Care” but
vision is not clearly shred by all. Also it is thoughtful that a company
declares a year of “Customer Care” and its employees are on strike
sitting in a 42 degree Celsius. Though strike issue has been solved but a
company needs a transformation first in its employees. Employee care
and customer care should go side by side. Although PTCL is generating
revenue from its value added services but it doesn’t have any solid
financial strategic outline, which can cope the entire complex financial
situation and recovery of bad debts. Also ambiguity exists in
implementation strategic financial plans. Externally PTCL has
competitors so it has no benchmark to gauge financial performance of
its different departments with those of competitors.

• Lack of Training Program

There is no proper training program to improve the skill of PTCL

employees to cope with every changing telecommunication sector. Less
skilled & inefficient workers are creating hurdles in its growth. Though
8,931,500 Rs. has been budgeted for training year 2008-2009 but is
almost equally distributed among Administration, HRD and finance. No
need based division of budget is done. Training on employee motivation,
team building and about new processes and software are essential.

• Essence of Bureaucratic Touch

The organization has transformed to company and emphasis is on

corporate culture but still the classical touch of a bureaucratic
organization exists. Especially some of the officers at the senior or
middle management level like to enjoy power in the bureaucratic style
and want to see the acceptance of their command down the order.

The awareness with modern management concept is the part of

the “change of culture” program which has been stated at all
management level.

OPPORTUNITIES

• Increasing Awareness Rate

PTCL can show its interest in educating people & increasing

literality rate in this way, PTCL will not only fulfill its social responsibility
but will also be able to increase awareness rate & it will be helpful in the
expansion of PTCL

• Skillful Human Resources

PTCL can improve the skill of its manpower by providing them the
opportunities of advanced courses that will make them to cope with the
ever changing condition in field of telecommunication.

• Telecom facilities in the rural areas

All the value added services and digital facilities are available only
in the main cities of Pakistan like IPTV, DSL etc. PTCL can expand its
business by providing value added telecom facilities in rural areas,
which is only possible when adequate planning is done.

• Addition to the Product line

Top management of organization can make additions to its

existing product line by providing more services. In this way it can
increase its revenue and customer satisfaction. This requires market
research. PTCL has already captured the industry so all kind of the
opportunities are for PTCL till the end of monopoly. PTCL can launch
“Wireless Internet Services” for excelling in telecom sector.

• Licensing as a Source of Revenue

Private mobile companies are getting license from PTA, which is a

source of revenue has also launched its own mobile services. New
licenses though will reduce market share for Ufone but will also help in
revenue transformation.

• IT and Communication: Vehicles of Modern Businesses

PTCL being the biggest telecom operator of the country has huge
potential for growth. Company can expand its services through
innovation. The broad band market is nascent market with very low
levels of penetration. The market potential for broadband is up to 2
million lines and by unique nationwide landline infrastructure PTCL can
dominate this segment.

THREATS

• Unstable Economic and Political Condition of Pakistan

The economic situation of Pakistan is unstable. The unstable

economic condition of Pakistan is a great threat to PTCL. In strong
economic conditions, the growth of business is very frequent. The poor
economic conditions increase the inflation rate that decreases the
buying power which is very threatening for PTCL. Also political and
economic instability creates uncertainness. Stock market and shares
can sustain bearish or bullish trend but it cannot tolerate uncertainty.

• Decrease in Market Share Due to Competition

Entering into the new era of competition may pose difficulties.

Many dissatisfied customers may shift to those telecom service
providers who they think would offer better services than PTCL, and will
increase customer satisfaction. Decrease in market share would
decrease the profitability of PTCL, which will be a real threat in near
future. PTCL broadband is unable to compete with other private DSL’s
like Link Dot Net by Orascom Company limited and Wateen telecom in
service quality.

Also in mobile sector the share of Ufone has decreased due to

entry of China Mobile and Telenor and it can further decrease if more
companies will enter.

• Increased Competition and Turnover

Due to emergence of bulk of WLL, ISP’s, Mobile companies and

WLL operators, company would have to compete for quality human
capital also. Though the pay structure has greatly improved after
privatization of PTCL, but as new employees are on contract so company
should provide competitive pays to its employees. Other wise the
human capital trained and developed by PTCL would be captured by
bulk of other telecom industry companies.

FINALCIAL ANALYSIS
All the ratios are calculated on the basis of financial statements
prepared till this quarter i.e. 9 months period. It is because the audit in
company was still in process by the external auditors, KPMG Taseer &
Hadi, so after audit the financial statements will be published. The
interim financial information has been prepared in accordance with the
requirements of the International Accounting Standard (IAS) 34
''Interim Financial Reporting''.

The condensed interim financial information is unaudited and is

being submitted to the shareholders as required by Section 245 of the
Companies Ordinance, 1984 and the listing regulations of the
Karachi, Lahore and Islamabad Stock Exchanges (Pakistan
Telecommunication Limited, 2008).

Income tax expense is recognized based on management's best

estimate of the weighted average annual income tax rate expected for
the full financial year.
 The calculation however in some ratios is done on previous year
data also, where quarterly ratios were meaningless.

Ratio Analysis of PTCL

Year
ended
June 30 2009 2008 2007 2006 2005 2004

Key
Indicators

Operating

Gross % 18.1 24.67 26.33 34.5 41.63 51.37

Margin 5
(Operating
Profit
Margin)

Pre Tax
Margin
(EBIT
Margin) % 25.2 -5.45 34.13 39.43 45.5 53.94

15.4
Net Margin % 5 -4.25 22.01 26.16 30.46 35.73

Performan
ce

Return on
Operating 10.9
Assets % 6 -3.34 18.76 25.53 34.83 38.46

Debtors’ TIME
Turnover S 4.9 2.35 48.86 4.76 5.35 5.14

Return on
Equity % 9.28 -2.17 14.45 20.22 25.45 28.2

Leverage

Debt: RATI 16.4

Equity O 8 15.85 14.86 14.86 13.87 13.87

35.6
Leverage % 6 27.48 27.92 31.28 25.65 23.91

Time
Interest Time 15.4
Earned s 3 -5.26 46.54 92.07 86.35 64.34

Liquidity

Time
Current s 1.5 1.81 2.19 1.66 1.89 2078
Quick Time
Times s 1.36 1.58 2.03 1.54 1.13 2.67

Valuation

Earnings
per share
(pre tax) Rs. 2.75 -0.88 4.66 6.07 7.71 8.5

Earnings
per share Rs. 1.79 -0.55 3.07 4.07 5.22 5.72

Breakup
value per 19.4
share Rs. 9 19.19 21.75 20.68 19.61 21.31

Payout
Ratio (after 122.7
tax) % 83.6 0 65.22 3 38.34 87.42

Market
Price to
Breakup
Value times 0.88 2.01 2.62 1.96 3.58 1.97

Dividend
per share Rs. 1.5 0 2 5 2 5

Market
value per
share (as 17.2
on June 30) Rs. 4 38.64 57 40.6 70.25 42.15

Market 8
Capitalizati Rs. 7,92 19 29 20 35 241
on (m) 4 7,064 0,700 7,060 8,275 ,965

Historical
Trends
Operating
Results

5
Rs. 9,23 6 7 6 8 81,
Revenue (m) 9 6,336 1,068 9,085 7,356 633

1
Profit/ (loss) Rs. 4,02 ( 2 3 3 43,
before Tax (m) 1 4,463) 3,744 0,974 9,296 360

Profit/ (loss) Rs. 9,45 1 4 2 29,

after Tax (m) 1 2,825 5,639 0,777 6,606 170

Dividend Rs. 7,65 1 2 1 25,

declared (m) 0 - 0,200 5,500 0,200 500

Financial
Position

Paid up 5
Share Rs. 1,00 5 5 5 5 51,
Capital (m) 0 1,000 1,000 1,000 1,000 000

3
Rs. 2,18 3 3 3 3 32,
Reserves (m) 3 2,183 2,249 1,922 2,008 000

9
Shareholder Rs. 9,39 9 11 10 10 109
s’ Equity (m) 0 7,888 0,913 5,475 0,014 ,100

5
Current Rs. 4,22 3 5 5 3 48,
Assets (m) 0 9,603 3,561 0,168 9,269 294
Non 1
Current Rs. 8,57 1 1 1 15,
Liabilities (m) 2 7,646 7,460 1,689 5,258 126

Operation
al

4,68 4,
ALIS (000) * NOS 1 5,181 5,455 5,568 5,235 837

ALIS Per
Employee NOS 168 118 91 89 82 71

Table 1 RATIO ANALYSIS

LIQUIDITY ANALYSIS

This shows that the number of days for the receivable outstanding
have increased, which indicates that in 2007 PTCL has 86 days for the
receiving back their receivables from its customers and in 2008 there is
an increase of 14 days because in 2008 days sales in receivables has
increased to almost 101 days. This is a not positive sign.

ACCOUNT RECEIVABLE TURNOVER

The turnover ratio of 2008 has decreased which is a not good

sign because it shows that the chances of getting back receivables
have decreased. It shows greater amount of sales is in receivables and
has not yet been recovered.

ACCOUNT RECEIVABLE TURNOVER IN DAYS

It indicates that the number of days of the chance of getting back the
receivables has decreased as compare to 2007.
WORKING CAPITAL

A decrease in the amount of working capital in 2008 shows that it

is a deteriorated situation of the company, which shows that it will be
difficult for company to be able to borrow on short notice.

CURRENT RATIO AND ACID- TEST RATIO

This indicates that in 2007 the company had a high ability to

meet its current liabilities out of its assets as compare to year 2008.

CASH RATIO

There is a decrease in 2008 in cash ratio, which shows that the

company is not having enough cash to its best advantage. As it is less
then 1 and current liabilities have increased also so the overall cash
ratio is not satisfactory. It can become difficult for company to meet its
immediate cash needs. The greater the cash ratio, the greater it is
better for company to meet its short term immediate expenses.

SALES TO WORKING CAPITAL

In year 2008 the sale to working capital ratio has deteriorated as

compared to year 2007, which indicates that company is
overcapitalizing its assets. It means that PTCL is able to generate
enough sales to meet its obligations. This on one end is a positive sign
also that assets are properly utilized. But at the same time it shows
that working capital is not invested in assts till this quarter.

PROFITABILITY ANALYSIS

Ratio for this period cannot be calculated as company is in loss till

this quarter. This ratio expresses the relationship between net profit
after tax and sales. This ratio is the measure of all profitability. It also
tells us that how much the company is saving after deducting all the
expenses from sales. Net profit margin ratio is also known as return on
sales. Higher the net profit ratio, higher the profitability of business.
Profitability of a firm is continuously deteriorating for 2007 which has
deteriorated even more over the year it is because company sales have
been increased however the increase in operating income was less then
increase in net sales. The expenses of company has also increased a lot
due to VSS cost and the company is in loss till this period. There is a
catch here that the company though has earned greater revenue for
these nine period but has shown this revenue as a usage of VSS cost.

TOTAL ASSET TURN OVER RATIO

This ratio indicates that how well the company has used its total
assets in generating sales. This ratio measures the activity of assets and
the ability of the firm to generate sales through the use of assets. If both
of these have been well managed then the sales would go up or vice
versa. Higher ratio is better for business. But due to increased amount
of assets and less increase in sales as compared to increase in assets
the company total asset turnover ratio has decreased.

DUPONT RETURN ON ASSETS

The core idea behind this ratio is that both Net Profit margin &
Total Asset Turnover have a direct impact on the return on assets ratio
(ROA). When these ratios are reviewed together it is called DUPONT
return on assets. A high profit margin means a high profit per 1Rs of
sales. Higher ratio is better for company. The company is lacking
behind as compare to last year as both net profit margin and total asset
turnover has decreased.

OPERATING INCOME MARGIN (PERCENT)

This ratio helps in determining the ability of the management in

the running business. It indicates the efficiency of the management.
Operating profit shows that what actually is left behind after deducting
all direct & indirect expenses from operations. Those expenses and
incomes which has no direct relation with the operations but which do
happen will be deducted after operating profit giving the net profit
before tax and eventually net profit after tax. Higher ratio is better for
company. It cannot be calculated for this period because operating loss
is occurring due high amount of operating costs involving bad debts and
VSS cost and company has deteriorated position over the previous year
end also.

OPERATING ASSET TURN OVER

The ratio measures the ability of operating assets to generate

sales. Higher the ratio is better for company. It means sales of the
company has increased in greater amount as compared to increase in
operating assets which have also increased. However it has decreased
in case of PTCL due less amount of operating assets. Company has
greater investments in capital work in progress.

RETURN ON OPERATING ASSET (PERCENT)

Operating Assets Exclude Construction Work In Progress from

property, plant and equipment and added current assets in it.
Investments and other long term assets are not included in operating
assets. Those assets are included which has a direct relation with
operations of a business. Higher return is better for company. The
company position has deteriorated as compared to the last year; it is
because the increase in company investments in capital works in
progress and intangibles (Logo and patent of PTCL).

RETURN ON INVESTMENT (ROI) (PERCENT)

This ratio determines the total income or the return that is earned
by all the providers of the capital (debt or equity). It is used for the
evaluation of enterprise performance and earning performance of the
firm. Further it measures the ability of the firm to reward those who
provide long term funds and to attract the providers of future funds.
Higher the ratio, the better it is. The company is lacking behind as
compare to last year because company equity has increased due to the
increase in reserves however the operating income increase is not
sufficient to offset it.
RETURN ON TOTAL EQUITY (PERCENT)

This ratio measures the profit earned by the share holders on their
invested amount in the company. It measures the return on common
shareholders, preferred shareholders and reserves also. Dividends are
deducted because its redeemable preferred-stock which is included in
the debt and not the equity so if there is any dividend that is to be paid
on it then that should be deducted from net profit so that the net figure
can be taken which is available to the total equity holders. Higher the
ratio, the better it is. The company is lacking behind as compare to last
year because company first of all is going in loss for this year. Also the
dividends paid are increased in order to have stable market price of
share in stock exchange.

INVESTOR ANALYSIS

DEGREE OF FINANCIAL LEVERAGE (TIMES)

The degree of financial leverage represents the benefits earned

from the funds borrowed. If firm earns more then the funds borrowed
then it is beneficial for them. The DFL of the company has increased
over the year slightly from 2006 to 2007, which shows that company
was effectively managing its borrowed funds and was able to generate
good earnings on it. However till these 9 month period, company is
unable to sustain its position and due to increased expenses is going in
loss. So company is risky to invest in and for the same reason company
may would have difficulties in further borrowing of funds from financial
institutions.

RATIO’S

EARNINGS PER COMMON SHARE

EPS of the company is continuously decreasing over the years. So

it shows that the decreased earnings of the company have deteriorated
it and the existing owners of the company has earned lesser over the
years. The number of shares has remained same but earnings have
been converted into loss, almost this year.

PRICE/EARNINGS RATIO

The P/E ratio of the company tells the increase in earnings

translated into the market price of the shares determined by demand
and supply in the market. The P/E ratio has increased over the year in
2007 which shows that market demand of the company shares has
increased (price on 30 June 50.48 Rs. as compared to 40.8 on 30 June
2006) and the investors were interested to purchase the shares of the
company due to its increased performance. But due to VSS, many
diverse restructuring reforms and large amount of Bad Debts company
share price is continuously decreasing in stock market to almost 30.59
Rs.

BOOK VALUE PER SHARE

The amount of stockholder equity contributable to each

shareholder has decreased over the year which is a negative sign. The
market value of stock is greater then the book value and is a good sign
but it is due to so much fluctuation and uncertainty in stock market.
Company management though has promised great potential and image
building in eyes of investors.

DIVIDEND PAYOUT (PERCENT)

The dividend payout ratio of the company has reduced over the
year. This shows that company is paying fewer dividends. The reason
being the company is the retaining more of the income for future
purposes and to have cost effective processes.

DIVIDEND YIELD (PERCENT)

Dividend yield of the company has decreased over the year. This
shows that company is paying fewer dividends and also the market
price per share of the company has decreased. This shows that
company is reinvesting its earnings and company is losing its
credibility in eyes of investors mainly due to uncertainty and
restructuring. Current retained earnings will result in future capital
gains for long term investors.

LONG TERM DEBT PAYING ABILITY

DEBT RATIO / SOLVENCY RATIO / DEBT TO TOTAL ASSETS

(PERCENT)

It indicates the firm’s long term debt paying ability. It indicates the
percentage of assets financed by creditors. From the perspective of long
term debt paying ability, the lower this ratio the better the company’s
position is and as per International Standards it should always be less
then 35 %. It tells us the company has 32.2% liability against 100%
assets. Previously it was 27.4 % against 100% assets. This shows that
company position has deteriorated as large amount of assets are
financed by the creditors and debts are increasing. Company is losing its
strength to take additional debts day by day.

DEBT – TO – EQUITY RATIO / DEBT TO NET WORTH RATIO

(PERCENT)

It compares the outsider’s funds / total debt with the share

holder’s funds / share holders Equity. It fulfills the same objective of
debt ratio. This ratio indicates us that which external party finances the
assets up to what extent. From the perspective of long term debt paying
ability, the lower the ratio is the better the company’s debt paying
position. However the higher ratio indicates the increased amount of
debts. The amount of liabilities have increased by not a large amount
but employee retirement benefits have tremendously increased to
16,018,903 on March 31, 2008 Rs. from 12,289,626Rs. on March 31,
2007. Also the inappropriate profit has tremendously decreased causing
shareholder equity to decline.
DEBT – TO – TANGIBLE NET-WORTH RATIO (PERCENT)

This ratio determines the long term debt paying ability of a

company. It also indicates that how well creditors are protected in case
of the firm’s insolvency. It is a more conservative ratio than either the
debt ratio or debt to equity ratio. From the perspective of long term
debt paying ability, the lower this ratio the better the company’s
position is. The higher ratio of PTCL indicates its poor condition. It is due
to the increase in liabilities over the year and decrease in
unappropriated profit of the company.

So overall the position of company is not very hopeful from

financial perspective. The reason being the great structural changes and
restructuring. Once restructuring will be completed the financial position
will be reinstated as additional costs will decrease. During the first nine
months of financial year 2007-08, total revenue of the company was Rs.
44.0 billion, showing a decline of 9% compared with Rs. 48.5 billion of
the same periods last year. However, revenue performance has shown a
consistent growing trend from quarter to quarter during the current
fiscal year. The operating expenses increased to Rs. 56.9 billion from
33.7 billion only because of VSS cost impact. As a result, there was an
operating loss of Rs. 13.0 billion. The non-operating income increased
by 11% to Rs.3.4 billion. The Company suffered a loss before tax of Rs.
10.0 billion for the nine month period ended 31st March, 2008. There is
a net gain in the provision for tax amounting to Rs. 3.4 billion which
reduced the net loss to Rs. 6.6 billion. The consolidated results of PTCL
group showed a better picture as the net loss before tax amounting to
Rs. 8.3 billion was less due to positive contribution of Ufone. Excluding
VSS impact, the group would have shown a profit before tax of Rs. 14.9
billion.
WORKING EXPERIENCES

LEARNING IN PTCL AS A INTERNEE

Budget Department: I have worked in this department under the

supervision of, Assistant Manager Budget Finance, Sir Amir.

STRUCTURE OF BUDGET DEPARTMENT

WORKING

• Assistance in preparation, documentation and filing of

annual budget
 • Preparation of budget input form

• Preparation of monthly variance report

• Maintenance of petty cash using SAP

• Preparation of budget input form

• Maintenance of petty cash

• Maintaining data

• Analyzing the demand

• File management

• Preparation of reports regarding incoming projects through

capital budgeting techniques

DUTIES AND RESPONSIBILITIES

I joined PTCL as an internee, so I have to perform different duties to

assist my advisors and office staff. I was working under the supervision
of two persons at the time. First one is the Finance Manager and the
second person was the Finance Executive.

FILE MANAGEMENT

The Finance Manager assigned me duty of managing the files. File

management includes;

• Maintaining the arrangement of files

• Filing the new vouchers in the file of current month

• Providing the required vouchers from files to the Finance

Manager and Finance Executive.

EXPERIENCE LEARNED

Internship is the first step for every student to enter into the world of
practical life. Educational life and practical life has a lot of differences
but academic life is the base for the practical life. According to my
experience internship is the best way to enter into the practical life.
During internship, students can learn a lot which is more than that they
can learn from books.

Internship has given a great boost to my knowledge, confidence and

experience. It gave me an opportunity to learn in the following areas;

• The internship gave me chance to meet with different type

of people which have different types of thoughts, behaviors
and actions. These people were my colleagues, the
customers, senior officers, mentors, members of other
departments and higher management of PTCL

• When I met with so many types of people, which gave me a

big chance to learn more about the behavior of people.

• The internship increased the level of my confidence and

communication skills as I had to meet so many people and
faces them and had to communicate with them on different
matters.

• This also increased the exposure of my thoughts. During my

study period, I was just like to think within the study material
approach, but the practical experience gave my mind new
ways that I could not think in the study life.

I learned the actual implementation of the accounting, finance and

mathematics in the real practical life

FINANCE DEPARTMENT

Finance department of Pakistan Telecommunication Company Limited

(Headquarter) is coordinating the activities of its sub departments i.e.
Budget, Revenue and Tariff.

Budget department has three branches i.e.

1. Preparation
 2. Distribution

3. Ceiling

Preparation branch prepares the budget for the coming financial

year. Distribution branch is responsible for allotment of funds to
different regions according to their requirements. Before issuing ceiling
it sees how much cash is available in the account of Pakistan
Telecommunication Company Limited in National Bank of Pakistan.

Revenue department is responsible for collection from its customers.

Some customers with huge amount of dues outstanding can't pay their
bills immediately after a specified time limit, list of defaulters is sent to
billing and recovering branch (B &R). Revenue department also sends
its daily reports to B & R branch about how much amount it has
collected among the bills issued to customers.

Tariff department is responsible for setting the charges/rates of

domestic as well as international calls. Among domestic calls, there are
local calls and long distance calls. Local call charges are usually fixed
and are for the calls with in the same city. Long distance charges vary
from city to city depending upon the distance between the cities.

Tariffs are usually modified at the beginning of each financial

year. There is wide difference between local call charges and long
distance charges Pakistan Telecommunication Company Limited is
adopting the policy of reducing this difference so it is gradually
increases the local charges while making reduction in long distance
charges.

Pakistan Telecommunication Company Limited has made

concerted efforts to collect arrears of dues from its customer. A special
task force was constituted for this purpose and the name of defaulters
was published in the newspapers to help recovery. The main reason for
the increase in the amount of default, however, is that the efforts for
recovery starts only after the default has already occupied and the
remedy lies in a major shift in the credit policy of Pakistan
Telecommunication Company Limited. Pakistan Telecommunication
Company' Limited is considering advance collection, which is already
the practice followed by mobile phone companies.

BUDGET DEPARTMENT

In Pakistan Telecommunication Company Limited the Budget

Department is a sub department of finance department of Pakistan
Telecommunication Company Limited. It is responsible for optimal
estimates of budget for Pakistan Telecommunication Company's main
head of Accounts and its allocation to particular regions of Pakistan
Telecommunication Company Limited.

There are three branches of budget department:

1. Preparation Branch. (Budget-1)

2. Distribution Branch. (Budget-11)

3. Ceiling Branch.

PREPARATION BRANCH

Preparation Branch is responsible for the preparation of budget for all

the main heads of Accounts of Pakistan Telecommunication Company
Limited. Preparation Branch makes the budget in a realistic manner
then its work is finished. For the realistic preparation of budget for the
main heads of Accounts, Preparation Branch has to see the past
record. It has to observe the historical revenue and expenses. It has
also takes into account the inflation rate for the year. Assuming the
inflation rate to be constant for the coming year, preparation Branch
notices any development or expansion in the region, and then it -has to
increase the budget for that main head of Account. If preparation
notices recruitment of more employees for a particular region, then it
has to increase the budget for Account of staff salaries and allowances.
If expenses of staff like stationary, ink files etc. increase then
 preparation branch has to increase the Account of staff salaries.

If increase in inflation rate is expected in the just coming years

but no development or expansion is expected then preparation branch
will increase the budget for that main heads of Accounts. -But only
takes into account the effect of inflation.

Preparation Branch not only prepares the budget for the

expenditure of different heads of Accounts but also makes an estimate
of budget for the company for the next coming year. While preparing
the budget branch revenue, preparation branch has some assets like
installation fee and line rent from where revenue is fixed. Preparation
branch has separate heads of accounts for telephone traffic receipts
and telegraph traffic receipts, miscellaneous telephone & telegraph
receipts and joint telephone & telegraph receipts. Having separate
accounts of revenue, preparation branch doesn't feel difficulty of
preparing budget for revenue of the next coming year.

DISTRIBUTION BRANCH

When preparation branch completes the process of preparing the

budget then starts the work of distribution department. The Function of
distribution branch is to allocate the budget to the particular head of
account of each region. Distribution branch keeps a small portion of
budget as reserve for contingent and unexpected events and allocates
the entire remaining budget to the particular head of account; this grant
is called AFG. Distribution branch, at the end of each month, analyses
the monthly expenditure of different heads of accounts like conveyance
allowance, out door treatment allowance, have constant or fixed
expenditure each month, so their analysis is quite easy. At the
beginning of year, expenditures are higher than ordinary expenditures
in the remaining period. Some heads of accounts have low expenditure
slightly increases and after six or seven months it begins to decrease.
Distribution branch observes the monthly expenditure of each and every
head of account and after six months if expenditure is more than
expected then central audit verifies it that why it has been increased.
Some time, more expenditure is required in a region because of starting
or development or unexpected inauguration of project. So distribution
branch allows the allocation of more expenditure is necessary and is
doesn’t exceed the need.

At the end of each financial year, allotted budget and the actual
expenditure are compared. If actual expenditure is less than allotment
then there is saving to the company so no action is taken. If actual
expenditure is slightly more than allotment, then it is unfavorable
variance. If that increase in expenditure is fair, then it is accepted. If it is
permanent, then increase is made in budget for the next coming year. If
actual expenditure significantly exceeds the allotted budget then the
case is given to the internal audit for the finding the reasons of that
significant increase in expenditure without any notice.

The effective control of distribution branch depends on judging the

fairness of any unexpected event and estimation of the fair expenditure
for allotment.

CEILING BRANCH

Ceiling branch issues funds for each head of account of each

region. Hence, ceiling branch is responsible for issuing the allocated
funds by the distribution branch.

Ceiling branch issues funds to each region on monthly basis to

certain head of accounts. As head of account, for the whole year so
ceiling branch divides the allotment by 12 to make rough estimate for
the monthly expenditure. Ceiling is issued to the DDO of each region
who is only responsible for drawing and disbursement of funds for each
head of account for his region.

Ceiling branch analyzes the expenditure of each head of account

at the end of each month. Ceiling branch make sure that expenditure
for a particular head doesn't increase beyond the ceiling issued (on
monthly basis) with out any sound reason. Ceiling branch like
distribution branch also keeps some reserves for unexpected or
unhappy events while issuing the Ceiling to each region.

Ceiling for staff salaries and allowances are fixed, while ceiling for
staff expenses, maintenance and petty work, office contingencies
(utilities, communication, printing etc.) vary because these charges are
not fixed. Ceiling branch has the daily record of collection of revenue
from customers and daily issuing of ceiling to different regions. By
continuously keeping and examining the record, the ceiling branch can
see that how much revenue has been collected and how much funds
(ceiling) have been issued to different regions All the revenue, which is
collected by different banks from customers of Pakistan
Telecommunication Company Limited, finally comes into National Bank
of Pakistan, who acts on behalf of the company and in which company
has its account. Ceiling branch daily examines the collection of revenue
in National Bank of Pakistan and issue ceiling to different regions from
that revenue. Company has also maintained retained earning and
reserves for contingencies. But some times, revenue collected from
customer is not sufficient to issue ceiling. Funds which to be issued are
more than funds available, so ceiling branch has to borrow running
finance to issue funds to different regions. Interest is paid on running
finance and when enough revenue comes into account, amount of
running finance is automatically deducted by National Bank of Pakistan.

Main heads that are used in issuing funds are:

• Establishment

• Working.

• Maintenance.

• General provident fund.

• Miscellaneous. (Education grant)

RECOMMENDATIONS
• The efforts should be made that PTCL be an independent
organization in its internal matters; ministry of communication
may give only guidelines.

• The officer may be trained to adopt the company culture, soft

spoken, good relations with customers and target oriented.

• There should be full-fledged marketing department, which should

be under chairman PTCL.

• Top management divisional engineers in the field to be business

and target oriented through short courses of marketing and
finance.

• Finance and Marketing officers and Engineers may be sending to

international seminars/workshops to get knowledge of new
technique and procedures.
 • There should be effective human resource department in order to
get right people on the right job.

• Promotion should be made on the basis of performance rather

than seniority.

CONCLUSION

PTCL land line phone and wireless system is the best option among all
the companies and reason being that it’s a well established company,
there are more chances to learn as compare to a newly emerged
company. While among the preceding companies, some has
government touch in its management style and some companies were
at sluggish phase. Management is well defined at PTCL. Rules are
specified and implemented on all the employees regardless of their
designation. There is homogeny in all regulation aspects. There are a
time to time motivational rewards, increments and acknowledgment.
REFRENCES

Abbasi, F. A. (2008). Data Billing and Payments: Orientation report. Unpublished

manuscript, Pakistan Telecommunication Company Limited, Islamabad,
International Revenue Department.

Ali, S. F. (2005). Training report. Unpublished manuscript, Pakistan Telecommunication

Company Limited, Islamabad, Accounts Section.

Anonymous (2000). Billing and Receivables-International business. Annexure- Accounting

entries, p.iii.

Anonymous (2000). Billing and Receivables-International business. Follow up actions for

overdue balances, c.6.2, p.19.

Anonymous (2000). Billing and Receivables-International business. Bad debts and write-
offs, c.7, p.22.

Jabeen, A. (2008). Orientation report. Unpublished manuscript, Pakistan

Telecommunication Company Limited, Islamabad, Advisory Section.

Sumaira khan (2007) Financial Specialist, Capital Budgeting

Pakistan Telecommunication Company Limited, Islamabad.

M.Fahim Tariq (1986) Accounts Officer, Ceiling/Treasury

Pakistan Telecommunication Company Limited, Islamabad.

Pakistan Telecommunication Company Limited, (2008). Third Quarter Report. Islamabad,

p.13.

Analysis of financial statements by

Fundamentals of financial management by Van Horne

ONLINE REFERENCES
• http://www.pta.gov.pk/

• http://www.hoovers.com/ptcl

• http://www.ptcl.com.pk

• http://www.ptcl.net
APPENDIX-A
 BOARD OF DIRCTORS
Chairman PTCL Board Chairman & Chief Executive Officer

Mr. Hifz-Ur-Rehman Mr. Abdulrahim Abdulla Abdulrahim Al

Nooryani
Secretary IT&T, Ministry of Information
Technology Etisalat International Pakistan L.L.C

Government of Pakistan, Executive Vice President Contracts &

Administration
Islamabad
Etisalat, UAE.

Secretary, Ministry of Finance Chief Human Resource Officer

Mr. Ahmad Waqar Mr. Abdulaziz Ahmed Saleh Ahmed Al

Sawaleh
Secretary, Ministry of Finance
Etisalat, UAE
Government of Pakistan,

Islamabad

Member (Telecom), Ministry of Executive Vice President Engineering

Information Technology
Mr. Fadhil Mohamed Erhama Al Ansari
Mr. Noor-ud-Din Baqai
Etisalat
Government of Pakistan,

Islamabad.
UAE

Ambassador, Embassy of Pakistan General Manager, Northern Emirates

Mr. Ahsanullah Khan Mr. Abdulaziz Hamad Omran Taryam

Abu Dhabi, UAE Etisalat, UAE

General Manager Company Secretary

Dr. Ahmed Al Jarwan Ms. Farah Qamar

Real Estate PTCL Headquarters, Islamabad

Etisalat, UAE