KARACHI: Pakistan Telecommunication Company Limited (PTCL) posted profit-after-tax (PAT) at Rs7.8 billion for the nine months (9M2014) ended Sept 30, translating into earnings per share (eps) at Rs1.54, down by 31 per cent over PAT at Rs11.2bn and eps at Rs2.21 in the corresponding period of last year.

Sales declined by 1pc to Rs99.3bn in 9M2014 compared to Rs100.3bn YoY. Gross margins squeezed to 34.5pc from 35.6pc.

Analyst Numair Ahmed at Arif Habib Limited commented that the results were below expectations and came as a surprise to the market as the company’s top-line declined by 12pc in third-quarter 2014, representing QoQ on consolidated basis revenue from PTCL (on standalone basis) and Ufone (100pc owned subsidiary) drop by 9pc and 17pc QoQ in 3QCY14.

Decline in revenue was attributed to decrease from LDI revenues as ICH traffic dropped by an estimated 24pc QoQ. PTCL’s finance cost jumped by 139pc QoQ to Rs2bn in 3QCY14 which was higher than initially expected and resultantly dented earnings expectations.

“This, we believe, can be attributed to a surge in interest costs of long-term borrowing obtained by Ufone for funding its 3G spectrum and licence renewal.

Also worth noting, the company booked a loss on assets destroyed in fire of Rs776m in 3QCY14 which sunk earning,” the analyst said, recalling the fire on Sept 28 at a PTCL exchange in Lahore which caused over 45,000 telephone lines and 25,000 internet connections to be disrupted in the city.

The PTCL meanwhile stated that “the largest ICT services provider in the country announced profitable quarter results riding on the back of its growing fixed and wireless broadband business.”

The company announced revenues of Rs62.6bn for the period ended Sept 30, 2014, an increase of 3pc over the same period of last year, while gross and net profit of the company stood at Rs20.9bn and Rs8.7bn, respectively. “PTCL cash flows remain healthy and stable due to the consistent growth in the subscriber base and strong market position,” the company stated.

PTCL Group earned revenue of Rs99.3bn during the reported period. Net profit earned was Rs7.8bn, while gross profit was recorded at Rs34.2bn.

Published in Dawn, October 17th, 2014