LAHORE  - Pakistan Telecommunication Company (PTC) has announced loss of Rs922 million for fourth quarter of 2015, lower than the loss of Rs3.9 billion reported in the same period last year. The company also announced a final cash dividend of Rs1/share, taking the total payout for the year to Rs2/share.
The PTC’s revenues have also declined 7 percent annually to Rs28.4 billion in the 4Q2015. Experts believe this is due to decline in subscribers of the company’s Evolution Data Optimized (EvDO) by 38 percent while subscribers of Digital Subscriber Line (DSL) and Wireless Local Loop (WLL) business remained flat. Moreover, a 9 percent decline in subscriber base of Ufone, PTC’s wholly owned subsidiary, to 19.9m also impacted the company’s revenue. The company’s cost of sales declined 6 percent to Rs22.3b, resulting in a gross profit of Rs6.1b, with gross margins down 118bps to 21.6 percent.
PTC reported an operating loss of Rs509m in 4Q2015 against operating profit of Rs1.8b in the same period last year. This was due to 20 percent increase in administrative expense to Rs5.3b and 66 percent increase in selling & marketing expense to Rs1.4b. Experts believe this was due to increased expenditure in marketing activities for Ufone and its 3G services to counter competition.
It should be noted that PTC reported Voluntary Separation Scheme (VSS) expense of Rs8.2b in 4Q2014, which dragged last year’s earnings into the red. On the basis of normalized earnings (excluding one-time impact of VSS), earnings from core operations were Rs4.3b in 4Q2014 compared to loss after tax of Rs922m in 4Q2015.
Experts flag decline in Ufone’s subscriber base due to cut throat competition in mobile subscriber arena, decline in EvDO subscribers and stagnancy in WLL and fixed line business as key risks associated with PTC.