KARACHI, Feb 22: Pakistan Telecommunication Co. Ltd. (PTCL) reported a sharp fall in half-year net profit on Thursday as revenue from international calls fell, but analysts forecast a stronger second half.

PTCL, the country’s second-largest listed firm, said it earned net profit of Rs8.37 billion in the six months to December 31, 2006, 22.71 per cent lower than Rs10.83 billion in the year-ago period.

The result was well below a range of Rs9.6bn to Rs10.78bn, forecast by five analysts surveyed by Reuters.

Analysts said competition on international calls forced the company to slash tariffs, hitting profit margins and outweighing subscriber growth.

“The result is definitely below expectations, and one of the primary reasons could be the hit on international revenues,” said Ovais Siddiqui, analyst at BMA Capital Management.

The company reported revenues of Rs32.74 billion during the period, 6.32 per cent lower than Rs34.95 billion in the corresponding period a year-ago.

PTCL, in which UAE-based Emirates Telecommunications Corp. (Etisalat) has a 26 per cent controlling stake, said earnings per share for the period stood at Rs1.64, compared with Rs2.12 in the year-ago period.

PTCL’s monopoly on landlines ended in December 2002 when the government introduced a deregulation policy that has 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.

Analysts, however, said the sharp tariff reduction, coupled with better services, should enable PTCL to attract more subscribers and consequently higher call traffic in months ahead, as the market gradually expands.

“The company is likely to post better results in the second half of FY07 on the back of growth in fixed line revenues, as well as healthier profits from Ufone,” said Ali Khizar, an analyst at brokerage JS Global Capital.

Ufone is the cellular network operated by Pak Telecom Mobile Co. Ltd., a wholly owned subsidiary of PTCL.

PTCL has a market capitalisation of about $3.47 billion.—Reuters