September 15, 2007	Saturday	Ramazan 2, 1428

KARACHI, Sept 14: Pakistan Telecommunication Co Ltd (PTCL) on Friday reported a 24.7 per cent fall in net profit for 2006-07, as rising competition led to a decline in revenues from call

traffic.

PTCL, which enjoys a virtual monopoly on the country’s land lines and also operates cell phone and Internet services, earned net profit of Rs15.64 billion for the year ended on June 30, the company said in a statement.

The firm earned net profit of Rs20.78 billion last year.

UAE-based Emirates Telecommunications Corp. (Etisalat) has a 26 per cent controlling stake in PTCL, and the Gulf operator said last week it was considering doubling its stake in Pakistan’s largest telecom provider.

Etisalat, the third-largest Gulf Arab telecoms company by market value, bought 26pc stake of PTCL in 2005 for $2.6 billion under an agreement that gave it management control.

PTCL also announced a cash dividend of Rs2 per share, its first payout for 2006-07.

Earnings per share fell to Rs3.07 from Rs4.07.

The result was broadly in line with a range of Rs15.41billion to Rs17.69 billion forecast by five analysts surveyed by Reuters.

“The main reason for the fall in profit is the intense competition, which led to reduced call tariffs and thus falling revenues,” said Hifza Zia, an analyst at brokerage Atlas Capital Markets.

PTCL’s revenue in 2006-07 fell 5.5pc to Rs65.28 billion. Operating costs, on the other hand, rose 11.7 per cent to Rs46.56 billion, which analysts said was due to a continuous rise in marketing costs and property rents.

PTCL’s monopoly on land lines ended in December 2002, when the government introduced a deregulation policy that enabled private companies to set up telephone services.Since then, dozens of rivals, including domestic wireless players such as Worldcall and Telecard, have eaten into PTCL’s call traffic and forced it to slash charges.

Etisalat also charges PTCL a technical services fee — 3.5 per cent of PTCL’s revenue -- for sharing technical expertise.

But analysts said PTCL’s profitability is expected to rise in coming years as it expands network and attracts more customers.

“We anticipate an 11 per cent annual growth in net profit of the company during the next three years,” said Abrar Hussain, an analyst at First Capital Equities.

“PTCL’s profitability growth is to result from the cumulative impact of expanded fixed line network, including WLL lines, long-term benefits from tariff re-balancing and increased call traffic,” he said.

Higher dividend receipts from Ufone, PTCL’s mobile phone arm, will also have a positive impact on the company’s earning, he

added.

The number of mobile phone users in Pakistan more than tripled to 58.4 million -- equivalent to about 35 per cent of the population of 165 million -- at the end of April from 16.9 million in September 2005, according to the website of the Pakistan Telecommunication Authority.

—Reuters