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Analyst Briefing: PTCL plans CAPEX of Rs20bn to expand FTHH Network

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July 16, 2021 (MLN): Pakistan Telecommunication Company Limited (PTCL) that provides telecom and other communication facilities throughout Pakistan, held a corporate briefing session yesterday wherein the management discussed the latest financial performance of the company and future outlook.

To recall, the company posted healthy net profits of Rs2.935bn during 1HCY21 which was 88x YoY higher compared to the same period last year. According to the management, the remarkable increase in profitability was due to 8% YoY growth in topline and a reduction in OPEX. Moreover, the decline in interest rates and PKR/USD appreciation (gain on foreign currency accounts) had a favorable impact on line items in 1HCY21.

Pakistan Telecommunication group is composed of PTCL and three wholly-owned subsidiaries namely Ubank, Ufone, and Dvcom & SmartSky. The major source of revenue comes from services such as data, voice, IPTV, connectivity services, interconnect, information and communication technology (ICT), digital solutions, and equipment sales. The government of Pakistan and Etisalat International Pakistan (EIP) holds the majority of the shares of the group.

During 1HFY21, the company posted a significant 8% YoY growth in its revenue which is the highest since 2014. The growth in revenues comes on the back of better customer experience, FTTH speedy deployment, and strong performance in the Corporate, Wholesale, and international segments.

Commenting on the performances of its subsidiaries, management apprised that in 2QCY21, Ufone’s 4G subscriber base witnessed a surge of 58% YoY while net sales grew 1.04xYoY. MFS, which is the UPaisa App of Ufone, continues to show promising results. The Ubank business portrayed an uptick of 8% YoY in revenue in 2QCY21, supported by an increase of Rs19bn in deposits and Rs9.6bn in loans. Ubank has a network of 200 ATMs across 183 cities and rural areas and has disbursed Rs7.7bn during 2QCY21.

According to the key briefing takeaways covered by AKD Securities, the earnings outlook for the company remains robust with PTCL targeting to further its outreach, planning capital expenditure of Rs20bn —30% of which would be utilized to expand the FTTH network. Moreover, the company’s flagship contract with Huawei Technologies Pakistan revolutionizing IP Edge and Optical Transport Network (OTN) would further cement PTCL’s positioning as a provider of high-speed data services.

It places the company on a sweet spot where Pakistan is undergoing a technological shift, and the low vaccination rate in the country is making normalization in economic activity harder to sustain, keeping preference for online channels intact.

Moreover, the company is actively penetrating in the Software-as-a-Service (SaaS) segment, locking in contract with UBL in providing state-of-the-art network architecture for UBL Data Centre facility in Karachi while other notable contracts include extension and up-gradation of internet services to utility stores and pilot run project of E-Education system for government schools. For Ufone, the management plans to participate in the upcoming auction of the 3G and 4G spectrum, which is slated to take place in Aug-Sep’21.

With regards to payouts, management said that the liquidity of PTCL has improved significantly, cash and cash equivalents, up by 1.26x YoY. However, they decided to retain profits for upcoming projects and is likely to make dividend payouts in 2HCY21.

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Posted on: 2021-07-16T17:17:00+05:00

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