KARACHI, July 27: Siemens Pakistan Engineering Company Limited would participate in the bidding to purchase 100 per cent PTCL shares in Carrier Telephone Industries (Pvt) Limited (CTI).
The decision was made by the Siemens' Board at a meeting held on Monday. The parent company Siemens AG, Germany already holds 47 per cent cumulative preference shares in CTI.
Siemens also announced its nine months to end June 2004 financial results reporting after-tax profit of Rs305 million on net sales valued at Rs4.8 billion. That reflected 38 per cent improvement in taxed profit of Rs220.7 million that the company made on net sales worth Rs4.2 billion in the comparable period of the previous year.
Net sales for the nine months improved 13.3 per cent while the operating profit grew 32 per cent to Rs567 million, from Rs429 million in the same period of 2003. Operating margin improved to 11.8 per cent, from 10.1 per cent of net sales.
Siemens is characterized by relatively a small and tightly held equity of 7.8 million shares of Rs10 each, which is why only 33,300 shares came up for trading during first six months of the calendar year 2004. Due to an excellent payout, which was 260 per cent cash for 2003 and 200 per cent interim for 2004, the share in Siemens is trading at a huge premium at Rs520.
Carrier Telephone Industries (CTI) that the Siemens means to bid for, is one of the several associated/subsidiary companies of Pakistan Telecommunication Company Limited (PTCL), which holds a hefty Rs7.9 billion in long term investments.
At June 30, 2003, CTI stood in the books of PTCL at the par value of Rs8 million in shares of Rs1,000 each. The value of investment based on net assets was Rs140 million.
The utility of CTI for Siemens would possibly be its integration into the company's other businesses. In terms of its over all valuation, the sale of CTI may not make a major impact on the PTCL financials, but analysts such as Tanvir Abid, Head of Research at Jahangir Siddiqui Capital Markets (Pvt) Limited pointed out: "It could signify initiative taken by the new PTCL management to restructure its portfolio and achieve greater efficiency in utilization of capital."
PTCL's FY04 earnings are expected at Rs27 billion, which would represent 17 per cent increase over FY03 earnings of Rs23.1 billion. "Profitability is expected to enhance mainly on the back of an 8 per cent growth in revenues emanating from a significant rise in traffic and new connectivity as a result of reduction in line rent and installation charges," Tanvir Abid commented.
He observed that those steps had been undertaken by the telecom giant in order to maintain its dominant position in deregulated environment amidst the forthcoming competition with the issuance of Long Distance International (LDI) licences, which is expected soon to be followed by the Local Loop (LL) licences. LDI licenses were issued to 19 firms on July 7, 2004.
Though only two companies, namely, World Call Communications and Callmate Telips so far had completed all formalities and submitted the performance bond of $10 million, the remaining companies were expected to get a month to finalize their stance.
Moreover, the PTCL board was in the throes of approving capital expenditure plan in the staggering sum of Rs25 billion, which involves installation of 2 million new communication lines.
