Despite the growth scenario projected by the federal government and international rating agencies, the business situation is getting deteriorated for telecom sector as showed by the biggest telecom giant of the country, PTCL Group remained in losses of Rs. 371 million during third quarter of 2015.
Financials of PTCL Group
The losses of PTCL Group were mainly due to heavy investment made by Group on its subsidiary Ufone, for rolling out 3G networks in different cities and while operating profits of cellular phone companies declined after imposition of taxes on 3G services.
The higher taxation increased the expense of Ufone as cellular phone company is still paying taxes to Punjab Government from its own pocket instead of passing GST to customers of mobile internet or 3G services.
Punjab Government has announced that it will withdraw 19.5% GST on internet services, however, official notification for reversal of taxes is still awaited even after five months of original announcement.
Revenue losses of PTCL Group are also attributed to decline in EVO subscribers after introduction of 3G/4G services in the country.
Besides, high operating cost, declining earning and expenses on infrastructure kept the bottom-line of PTCL in the red.
The revenue of telecom giant declined to Rs 29 billion in the period of July to September 2015, slightly down from Rs. 30 billion it generated during same period last year, but operating profit declined by 78 percent to stand at Rs 328 million, as against of Rs 1.5 billion recorded in the same period of last financial year.
The expenses of the group stood at Rs 6.62 billion whereas the finance cost is reported at Rs 1.86 billion.
PTCL Profit Grows by 7%
PTCL, without its subsidiaries, demonstrated a profit of 7 percent in the first half of 2015-16.
According to financial results disclosed by board of directors recently, the PTCL’s overall profit stood at Rs 1.866 billion in the third quarter of 2015 as against profit of Rs 1.744 billion it reported during the same period of last financial year.
During the period, the group revenue posted a decline of 4.8 percent to settle at Rs 18.76 billion as compared to same period of last financial year.
Company’s selling and marketing expenses remained flat at Rs 3.353 billion, which eroded its profitability besides losses under the head of finance cost which stood at Rs 124 million.
The balance sheet of the Group disclosed to stock exchange also stated results from January to September to show revenue situation as stable and positive.
Hence, PTCL group revenues were seen to stand at Rs. 90.1 billion, while gross and net profit of the group stood at Rs. 24.4 billion and Rs. 2.8 billion respectively, in the period of January to September. This is because of the impact of half year of 2015 which was comparatively better than the present situation which is quite challenging for the telecom giant.