Pakistan Telecom Sector News and Discussions

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“Challenging” year for Telenor
By BR Research on January 31, 2020

Amid macroeconomic headwinds, how good or bad was 2019 for the telco's? Well, it's accounting time, and the first one to go is Telenor Pakistan. Looking at Telenor Group's financials released earlier this week for the year ended December 31, 2019, it is clear that Telenor Pakistan struggled quite a bit in 2019. Nearly all key indicators took a dip in rupee terms, an effect that was pronounced in Norwegian Krone (NOK) terms due to significant rupee depreciation against the greenback in the relevant period.

For the Fornebu, Norway-based telecom group, its Pakistan-based mobile network operator (MNO) posting a double-digit topline decline in NOK terms must be dispiriting, as if regulatory uncertainties weren't enough. (For more on the regulatory hiccups in the year past, read: “Telecoms: renewal saga isn't over," published November 13, 2019).

Over a longer timeline, the 2019 financials look as if the MNO has been teleported back into 2016 in rupee terms, and even earlier in NOK terms. No wonder the group's latest annual report ended up using the term “challenging" three times to describe how the local market in 2019 fared for Telenor Pakistan. Lower revenues and higher costs was the sad combination quarter after quarter in the year gone by.

In rupee terms, Telenor Pakistan revenues summed up to almost Rs106 billion in CY19, which is a 5 percent drop over the previous year. This is mainly due to the fact that the sector in general, Telenor Pakistan and other MNOs, could no longer charge the 10 percent “service fee" on account recharge after an apex court ruling last summer.

All revenue streams declined for the second-ranked operator in the period under review. However, “subscription and traffic" revenue segment, which is the breadwinner, suffered the most. The drop was somewhat, not entirely, offset as the company added nearly two million subscriptions during the year, with total subscriptions reaching 45.38 million as of 2019 end.

The demand-side of the economy has felt hard done by the tide of high inflation ripping through food and energy prices throughout 2019. Most consumer-facing industries are suffering, and telecommunications is no exception. But the gradual slide in the MNO's average revenue per user (ARPU), in both PKR and NOK terms, must be disconcerting at the HQ. The ARPU stood at Rs187 per month for CY19, which is a nominal decline of 10 percent year-on-year. When seen in real terms, the decline is further conspicuous.

While revenues fell, the descent in operating profitability was more severe. The operating profits almost halved in the year under review to Rs23 billion. This came on the back of rising prices of utilities, especially electricity, as well as higher network costs due to network expansion. The Ebitda margin also took a hit, falling to 44.6 percent in the year, compared to 57.3 percent in CY18.

Despite the tough odds, the company pumped Rs25 billion in capex in Pakistan, an amount that is 43 percent more than the same period last year. It is also the highest capital spending since 2016. Meanwhile, the Telenor Group has dropped no hint that it is aiming to settle the pending legal matter of the renewal of its GSM license. It is not striking a defiant note either. However, it has disclosed to shareholders that “the company has a stay order until the final outcome".

Would 2020 be different? It appears that the lingering litigation with the government over license renewal and the depressed consumer economy will leave the MNO's sponsors sober again this time next year.

https://www.brecorder.com/2020/01/31/566720/challenging-year-for-telenor/

 

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PTCL group: declining fortunes
By BR Research on February 12, 2020
If there was still any doubt that year 2019 was a particularly bad year for the local telecom industry, the latest financial results of Pakistan Telecommunications Co. Limited Group (PSX: PTC), for the year ended December 31, 2019, should provide some clarity. After having a rather good year in 2018, the telecom giant had to watch profitability more than halve in a difficult year of rising costs and expenses.

It all started with a weak showing at the top. The group topline scored a yearly gain of just 2 percent in CY19. This is down from a healthy growth of 8 percent the previous year. With inflation in double digits, this is negative growth in real terms.

The topline has flat-lined mainly because the PTCL Company – the behemoth that provides over half of group topline – could grow its revenues by a meager 0.39 percent year-on-year. It appears that the company's broadband business, which is a promising segment given the untapped market, is growing just enough to compensate for the declining revenue streams, but not enough to boost company financials.

The consolidated topline growth, therefore, was mainly carried by subsidiaries – mainly Ufone and UBank – which had a combined revenue lift of 4 percent year-on-year. This gain could have been even more had Ufone revenues not been affected by the apex court's ruling last summer that disallowed the mobile network operators from deducting 10 percent of airtime recharge under “service" fees/charges.

Despite some revenue growth, the group's operating profitability took a dive, driven by decline in operating profits of both PTCL Company and the subsidiaries. The inflationary pressures during the year raised costs for the telecom industry, through higher prices of electricity, and fuel. Besides PKR depreciation between January and July last year also raised the cost of imported components. In addition, network expansion at Ufone and branch expansion at UBank also drive the costs.

In the end, the group bottomline, while still profitable, saw its growth hurt by visibly-reduced profitability at the PTCL Company along with the subsidiaries' combined net losses which more than doubled compared to CY18. The latest financials suggest that higher interest rates in the period had wiped out operating profit and increased the net loss at Ufone, which has financed its expansion through loans.

A challenging macro-economy is hurting all telecom players, but since the PTCL Group has the advantage of “scale", it should do better than the rest. The PTCL Company needs to expand its network transformation program to drive more growth from its DSL broadband business. And Ufone needs to find cheaper financing alternatives to fuel the next round of growth.

Over at the bourse, the PTC stock has moved in tandem with the broader index. This perhaps reflects that the stock's trading is influenced more by daily market movements than by long-term company fundamentals. However, the stock has lost almost 10 percent of its value in the last 12 months. Under the new CEO who took charge last year, it remains to be seen whether PTC will be able to regain its footing.

https://www.brecorder.com/2020/02/12/570205/ptcl-group-declining-fortunes/

 

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Telenor, Zong & Ufone miss most of key performance indicators: survey
By TAHIR AMIN on March 21, 2020

Telenor, Zong and Ufone have missed most of the key performance indicators (KPIs) set in their license and applicable regulations, revealed an independent quality of service survey carried out by the Pakistan Telecommunication Authority (PTA).

The PTA has released the findings of an independent survey carried out independently in the 3rd and 4th quarter 2019 to check quality of service (QoS) of cellular mobile operators (CMOs) from September to December 2019 in 12 cities of Balochistan, Khyber-Pakhtunkhwa, Punjab, Sindh, and Azad Jammu and Kashmir.

The cities include Abbottabad, Charsadda, Gujranwala, Murree, Muzaffarabad, Sargodha, Sibbi, Sukkur, Thatta, Swabi, Tando Allahyar, and Taxila.

The performance of data services of the CMOs has been checked by measuring user data throughput and signal strength (i.e. received signal code power (RSCP) for 3G and reference signal receive power (RSRP) for 4G.

The signal strength KPI defines RSCP for 3G and RSRP for 4G, and denotes the power measured by a receiver on a particular physical communication channel.

It is used as an indication of signal strength, as a handover criterion, in downlink power control, and to calculate path loss.

RSCP of 3G Network of all CMOs observed to be greater than -100 dBm with 90 percent confidence.

The RSRP of 4G network falls short of the minimum threshold (-100 dBm with 90 percent confidence) both in urban and rural areas.

Telenor and Zong failed to achieve the desired threshold in rural areas.

Grade of service is probability that the end customer cannot access the mobile services, when requested, if it is offered by display of the network indicator on the mobile phone.

In simple words, Grade of Service is Network Blocking.

Telenor failed to meet this threshold value (Threshold: ? 2%) in both rural and urban areas. Ufone was unable to achieve the desired threshold in urban areas. Service accessibility is the probability that the user can access the desired service. A given network accessibility is a precondition for this phase. Telenor failed to achieve the criteria (Threshold: > 98 percent) of service accessibility in both urban and rural areas.

Call connection time is the time between sending of complete call initiation information by the caller and in return receipt of call setup notification. In simple words, it is time between dialing a number and hearing ring-back tone. Zong failed to achieve the benchmark (Threshold: ? 6.5 sec) of call connection time of 6.5 seconds.

Call completion ratio is the probability that a service, once obtained, will continue to be provided under given conditions for a given time duration or until deliberately terminated by either caller (A-party) or receiver (B-party). In simple words, this KPI provides information about call drops.

Telenor failed to meet threshold value of 98 percent.

Inter System Handover is the measurement of successfulness of handover in 3G/2G for circuit switched voice.

Ufone failed to meet the threshold value of 98 percent in urban areas. Zong failed to meet the threshold value of 98 percent in rural areas. The performance of SMS services of CMOs has been checked by measuring SMS success rate and end-to-end SMS delivery time key performance indicators (KPIs).

The SMS success rate is the probability that the short message is delivered successfully, end-to-end when requested, and display of the relevant information on the mobile phone.

It provides information about successful delivery of the SMS. The SMS Success Rate of Telenor and Ufone were observed below 99 percent in urban areas.

The User Data Throughput KPI defines user data rate (internet speed) to be provided by the CMOs to mobile users across the coverage areas.

The CMOs user data “throughput" of 3G services found higher than the threshold value of 256Kbps. The CMOs User data “throughput" of 4G services found higher than the threshold value of 2Mpbs.

The performance of voice services of the CMOs has been checked by measuring Network Down Time/Network Accessibility, Grade of Service, Service Accessibility, Call Connection Time, Call Completion Ratio, End-to-End Speech Quality and Session Abnormal Release Rate Key Performance Indicators.

https://www.brecorder.com/2020/03/2...ss-most-of-key-performance-indicators-survey/