KARACHI, April 2: Market punters who fell over each other in a bid to be the first to buy shares in Callmate Telips Telecom Limited (CTTL) on the eve of the New Year two years ago at the then ruling price of Rs119 must be kicking themselves.

The stock in the company is now trading at the token value of Rs7. Seldom has a security fallen from grace as quickly as that of this long distance and international (LDI) private operator in Pakistan.

Many shareholders (rightly or wrongly) believe that they have paid for the Regulators lack of teeth. The fact that the stock is still on the big board, points to the possibility of entrapment of more unsuspecting investors.

Those who bought the CTTL stock at the calculated and reasonable ‘fair value’ a few years ago could only be partly blamed for a dumb investment decision. The prognosis for CTTL did not look that bad two years ago.

Market participants say that greed, treachery, conspiracy and lethargy led to the demise of Callmate. An incredible number of 12 successive upper locks from Nov 17 to Dec 4, 2006 carried the stock price from Rs57 to as high as Rs102.

All of that was prompted by the promise by a local institutional player to an overseas investor to finance the purchase and the subsequent sale of his holding at Rs120 a share, which happened to be more than double the price tagged to the scrip in the winter of that year. As the story goes, the proposer then backed out of the deal.

It is difficult to say what was more compelling: The greed of the buyer or the treachery of the proposer, or both. But investors began to jettison the stock, which hit four lower locks from Dec 5 to 8.

More complications came to light when it was discovered that 55 per cent shares in the company were in the ‘badla market’, 5 per cent more than its ‘free-float’ which was 50 per cent of the company’s paid-up shares at 65.6 million.

There remains also the grim suspicion that in opting to pull punches in public with the mightiest audit firm in the country, CTTL had sealed its own fate. The argument between the company and its statutory auditors in respect of correct accounting policy to recognise revenue when the cards were actually utilised by customers (usage-based policy recommended by the auditors) or at the time of sale to dealers (despatch base policy followed by the company), led to a qualification in the audit report and fury and rage.

The company board changed auditors, but the decision was overturned by the Securities and Exchange Commission of Pakistan. The SECP also suspended trading in the company’s stocks for 60 days and ruled as illegal a bonus issue declared by it. But all that came was too little and too late. The stocks had already started to head towards the pit.

This February, CTTL announced its delayed accounts for financial year 2007. The company posted a net loss of Rs359 million (loss per share Rs5.50) compared with profit of Rs603 million (earning per share Rs9.23), in the year preceding.

Sales experienced substantial decrease of 29 per cent to Rs2.9bn as against Rs4.1bn in FY2006. This decline in revenues was not matched by a similar reduction in cost of sales which receded by only 22 per cent to Rs2.35 billion as against Rs3.02 billion the year earlier.

The gross margins as a result, stood trimmed by 7 per cent to 20 per cent for FY07. The board skipped a dividend. Shareholders are now groping in the dark. There is little knowledge about the company and the prospects about its stocks.

Several calls made to the CTTL offices in Karachi on Wednesday, went unattended.