propakistani report pakistan telecommunication company ltd. 1 quarter reportst 4 the directors are...

PAKISTAN TELECOMMUNICATION COMPANY LTD.

st1 Quarter Report

CONTENTS

Board of Directors 2

3

4-5

8-9

10

11

12

13-15

18-19

20

21

22

23-25

Condensed Interim Financial Statements

Condensed Consolidated Interim Financial Statements

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Naguibullah MalikChairman PTCL Board

Secretary (IT & Telecom Division)

Ministry of Information Technology

Government of Pakistan

Islamabad.

Abdulrahim A. Al NooryaniChairman & Chief Executive Officer

Etisalat International Pakistan L.L.C

Executive Vice President (Contracts & Administration)

Etisalat, UAE.

Mushtaq Ahmad BhattiMember (Telecom)

Ministry of Information Technology


Islamabad.

Khurshed Ahmed JunejoAmbassador

Embassy of Pakistan

Abu Dhabi, UAE.

Salman SiddiqueSecretary (Finance)

Ministry of Finance


Islamabad.

Abdulaziz A. Al SawalehChief Human Resources Officer

Etisalat, UAE.

Fadhil Al AnsariExecutive Vice President (Engineering)

Etisalat, UAE.

Abdulaziz H. TaryamGeneral Manager (Northern Emirates)

Etisalat, UAE.

Dr. Ahmed Al JarwanGeneral Manager/eRE

Etisalat, UAE.

Farah QamarCompany Secretary

Board of Directors

st1 Quarter Report2

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Walid IrshaidPresident & Chief Executive Officer

Muhammad Nehmatullah ToorS.E.V.P (Finance) / CFO

Syed Mazhar HussainS.E.V.P (HR / Admin & Procurement)

Sikandar NaqiS.E.V.P (Corporate Development)

Naveed SaeedS.E.V.P (Commercial)

Muhammad Nasrullah Chief Technical Officer (C.T.O)

Tariq SalmanS.E.V.P (Business Zone North)

Abdulla YousefS.E.V.P (Business Zone South)

Hamid FarooqS.E.V.P (Special Projects)

Javed MushtaqChief Information Officer (C.I.O)

Management

Farah Qamar

BankersAllied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Bank Al Habib Limited

The Bank of Punjab

Citibank, N.A.

Dubai Islamic Bank

Faysal Bank Limited

Habib Metropolitan Bank Limited

MCB Bank Limited

Meezan Bank Limited

National Bank of Pakistan

NIB Bank Limited

Royal Bank of Scotland

Silkbank Limited

SME Bank Limited

Standard Chartered Bank (Pakistan) Limited

United Bank Limited

Share RegistrarM/s FAMCO Associates (Pvt.) Limited

Ground Floor,

State Life Building No. 1-A,

I.I. Chundrigar Road, Karachi - 74000

Pakistan

Tel: +92-21-32422344, 32467406 &

32420755

Fax: +92-21-32428310

Corporate Information


st1 Quarter Report3

Company Secretary

Zahida Awan

Ghulam Mustafa

Legal Affairs

Auditors

A.F. Ferguson & Co.Chartered Accountants

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

Registered OfficePTCL Headquarters, Sector G-8/4,

Islamabad-44000, Pakistan.

Tel: +92-51-2263732 & 34

Fax: +92-51-2263733

E-mail: [email protected]

Web: www.ptcl.com.pk

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Directors' Report


st1 Quarter Report4

The Directors are pleased to present their report together with the un-audited financial statements of the Company for the three months ended September 30, 2010.

During the period under review, PTCL Group revenue at Rs. 25.4 billion was 4% higher than the same period last year. However, because of catastrophic floods in most part of the country, PTCL revenue at Rs. 13.9 billion declined by 4% during this period as compared to same period last year. The attrition was mostly witnessed in revenue from PSTN, International Business and Carrier & Wholesale segments. On the other hand, revenue from Broadband services (wireline and wireless) showed promising increase in this period.

The overall operating expenses during the period under review increased by 9% compared to corresponding quarter last year. Main reason for the higher expenses is the effect of increase in employees' compensation. Accordingly, the Cost of Services increased by 9% and the Administrative and General Expenses were higher by 5%. The Selling and Marketing Expenses increased by 21% because of continued focus on enhancing public awareness of various new packages introduced specially to promote the Broadband services.

The Other Operating Income at Rs. 1.9 billion increased by 71%; main reason being healthy returns on Company's investments and enhanced availability of funds as is evident from decreased levels of trade debts compared to the respective amount as of September 2009. Accordingly, the better management of available funds also decreased the Finance cost by 46%.

During the quarter under review, your Company earned profit after tax of Rs. 2.1 billion (EPS Rs.0.41). We are also pleased to report that Ufone, the wholly owned subsidiary of your Company, maintained its high performance and growth in the cellular sector and accordingly its revenue and profitability was 16% and 92% higher respectively than the same period last year.

Taking cognizance of loss of business and infrastructure because of floods, your Company’s employees made hectic efforts to restore its services even at times risking their lives and also ensured that the targets to install new connections and faults removal are achieved to the maximum even in these trying times. As a result of the all out company-wide efforts, your Company was successful in regaining the operational normalcy within the period under review.

The Company introduced many new and exciting packages and historical milestone was crossed by offering 10MB Broadband connection for the first time in Pakistan. Besides, the speed of other Broadband packages was increased many folds without extra burden to the consumers. To attract new PSTN business, the installation charges for new connections were substantially reduced; bundled packages for international dialing were introduced and new campaigns like free telephone sets for new connections during Ramadan and gift schemes for usage enhancement etc. were launched.

In order to keep your Company fully abreast of the technological advancement in telecom field PTCL further improved its networking and

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st1 Quarter Report5

infrastructure capabilities. A new Data Centre has been established in Lahore which is similar to the one earlier set up in Karachi. Commensurate with the launch of Rev-B technology for EVO wireless broadband, whereby the internet speed has been tripled to 9.3 Mbps, the respective network in all the major cities was upgraded. Further expansion in existing capacity of DSL Broadband was carried out. Country-wide availability of bandwidth to support the segment of Broadband (DSL and EVO) and Corporate Services was enhanced by augmenting the Metro Ethernet Network. Major work on phase II of Optical fibre (OFC) network was completed besides increasing the OFC resilience in smaller cities. The Access Network in Greenfield areas was expanded to provide for increased PSTN and Broadband connectivity. To curb the menace of grey traffic, the project of Revenue Assurance and Fraud Management based on latest available technological solution is underway. Besides, work on various USF projects to provide telecommunication facilities in rural and under developed areas is being completed in line with the contractual obligations.

The management and employees of PTCL are committed to provide quality services at competitive prices through optimal use of resources for achieving enhanced revenue and improved shareholders' value.

On behalf of the Board,

Naguibullah Malik Walid IrshaidChairman PTCL Board President & CEO PTCL

Islamabad: October 27, 2010

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feel the difference

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Condensed InterimFinancial Statements

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st1 Quarter Report

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITIONAS AT SEPTEMBER 30, 2010 (UN-AUDITED)

The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements.

8

September 30,

2010

Rs ‘000

(Un-audited)

June30,

2010

Rs ‘000

(Audited)Note

5

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June30,

2010

Rs ‘000

(Audited)


st1 Quarter Report9

September 30,

2010

Rs ‘000

(Un-audited)

Fixed assets

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st1 Quarter Report10

September 30,

2010

Rs ‘000

September 30,

2009

Rs ‘000

13

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

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September 30,

2010

Rs ‘000

September 30,

2009

Rs ‘000

13

Note

10

11

CONDENSED INTERIM STATEMENT OF CASH FLOWS

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1. The Company and its operations

Pakistan Telecommunication Company Limited ("the Company") was incorporated in Pakistan on December 31, 1995 and commenced business on January 01, 1996. The Company is listed on Karachi, Lahore and Islamabad stock exchanges. The Company was established to undertake the telecommunication business formerly carried on by Pakistan Telecommunication Corporation (PTC). The business was transferred to the Company on January 01, 1996 under the Pakistan Telecommunication (Re-organization) Act, 1996 at which date the Company took over all the properties, rights, assets, obligations and liabilities of PTC except those transferred to National Telecommunication Corporation (NTC), Frequency Allocation Board (FAB), Pakistan Telecommunication Authority (PTA) and Pakistan Telecommunication Employees' Trust (PTET). The registered office of the Company is situated at PTCL Headquarters, G-8/4, Islamabad.

The Company provides telecommunication services in Pakistan. It owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan. The Company has also been licensed to provide such services to territories of Azad Jammu & Kashmir and Gilgit-Baltistan.

2. Basis of preparation

These condensed interim financial statements are unaudited and are being submitted to the members in accordance with the requirements of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS) 34 'Interim Financial Reporting'. These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the annual audited financial statements of the Company for the year ended June 30, 2010.

3. Significant accounting policies

The accounting policies adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of annual audited financial statements of the Company for the year ended June 30, 2010.

4. Accounting judgement and estimates

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgements are continually evaluated and are based on historic experience including expectation of future events that are believed to be reasonable under the prevailing circumstances.

Estimates and judgements made by the management in preparation of these condensed interim financial statements are the same as those used in the preparation of annual audited financial statements of the Company for the year ended June 30, 2010.

5. Contingencies and commitments

5.1 Contingencies

There has been no material change in contingencies since the last annual audited financial statements of the Company.

5.2 Commitments

Commitments in respect of contracts for capital expenditure amount to Rs. 15,280,902 thousand (June 30, 2010: Rs. 14,127,643 thousand).

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTSFOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)

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June 30,

2010

Rs ‘000

(Audited)

September 30,

2010

Rs ‘000

(Un-audited)



8. Long term loans

This includes unsecured loans of Rs. 11,000,000 thousand (June 30, 2010: Rs. 7,000,000 thousand) to Pak Telecom Mobile Limited, a wholly owned subsidiary of the Company, under subordinated debt agreements. These loans are recoverable in eight equal quarterly instalments commencing after a grace period of 3 to 4 years by 2015 and carry mark-up at the rate of three months KIBOR plus 82 to 180 basis points.

Property, plant and equipment6.

Operating assets7.

Transactions with related parties9.

September 30,

2010

Rs ‘000

(Un-audited)

September 30,

2009

Rs ‘000

(Un-audited)

September 30,

2010

Rs ‘000

(Un-audited)

June 30,

2010

Rs ‘000

(Audited)

7

7.1

9.1

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12. Date of authorisation for issue of financial statements

These condensed interim financial statements were authorised for issue on October 27, 2010 by the Board of Directors of the Company.

13. General

Figures presented in these condensed interim financial statements have been rounded off to the nearest thousand rupees.

Effect on cash flows due to working capital changes:

Cash generated from operations10.

Cash and cash equivalents11.

September 30,

2010

Rs ‘000

(Un-audited)

September 30,

2009

Rs ‘000

(Un-audited)

9.1 This represents PTCL's share of fee payable to Emirates Telecommunication Corporation (Etisalat) under an agreement for technical services effective October 01, 2006 at the rate of 3.5% of PTCL group's consolidated annual revenue.

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Financial StatementsConsolidated InterimCondensed

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PAKISTAN TELECOMMUNICATION GROUP


CONDENSED CONSOLIDATED INTERIM

AS AT SEPTEMBER 30, 2010 (UN-AUDITED)

STATEMENT OF FINANCIAL POSITION

September 30,

2010

Rs ‘000

(Un-audited)

June 30,

2010

Rs ‘000

(Audited)

5

The annexed notes from 1 to 10 form an integral part of these condensed consolidated interim financial statements.

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September 30,

2010

Rs ‘000

(Un-audited)

June 30,

2010

Rs ‘000

(Audited)

Fixed assets

Note

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CONDENSED CONSOLIDATED INTERIM

FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)

STATEMENT OF COMPREHENSIVE INCOME

September 30,

2010

Rs ‘000

September 30,

2009

Rs ‘000


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September 30,

2010

Rs ‘000

September 30,

2009

Rs ‘000Note

6

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CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)

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1. Constitution and ownership

The consolidated financial statements of the Pakistan Telecommunication Group ("the Group") comprise of the financial statements of:

Pakistan Telecommunication Company Limited (PTCL)

PTCL owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan. PTCL has also been licensed to provide such services to territories of Azad Jammu & Kashmir and Gilgit-Baltistan.

Pak Telecom Mobile Limited (PTML)

PTML provides cellular mobile telephony services throughout Pakistan under the brand name of Ufone.

Maskatiya Communications (Private) Limited (MAXCOM)

MAXCOM provides broadband services in the cities of Karachi & Hyderabad.

2. Basis of preparation

These condensed interim financial statements are unaudited and are being submitted to the members in accordance with the requirements of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS) 34 'Interim Financial Reporting'. These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the annual audited financial statements of the Group for the year ended June 30, 2010.

3. Significant accounting policies

The accounting policies adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of annual audited financial statements of the Group for the year ended June 30, 2010.

4. Accounting judgement and estimates

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Estimates and judgements are continually evaluated and are based on historic experience including expectation of future events that are believed to be reasonable under the circumstances.

Estimates and judgements made by the management in preparation of these condensed interim financial statements are the same as those used in the preparation of annual audited financial statements of the Group for the year ended June 30, 2010.

5. Contingencies and commitments

5.1 Contingencies

There has been no material change in contingencies since last audited financial statements of the Group.

5.2 Commitments

Commitments in respect of contracts for capital expenditure amount to Rs.26,584,279 thousand (June 2010: Rs. 18,967,439 thousand).

NOTES TO AND FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTSFOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)


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Effect on cash flows due to working capital changes:

8. Segment Information

For Management purposes, the group is organized into business units based on their services and has two reportable operating segments. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

8.1 Revenue information regarding the Group's operating segments for the quarter ended September 30, 2010 and 2009 is tabulated below:

8.1.1 Inter segment revenues are eliminated on consolidation.

Rs ‘000 Rs ‘000 Rs ‘000

non-cash charges & other items:

September 30,

2010

Rs ‘000

September 30,

2009

Rs ‘000

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9. Date of authorisation for issue of financial statements

These condensed interim financial statements were authorised for issue on October 27, 2010 by the Board of Directors of the Group.

10. General

Figures presented in these condensed interim financial statements have been rounded off to the nearest thousand rupees.

Rs ‘000 Rs ‘000 Rs ‘000


8.2 Assets & liabilities of the Group's operating segments as at September 30, 2010 and June 30, 2010 are tabulated below.

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Notes

st1 Quarter Report

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propakistani report pakistan telecommunication company ltd. 1 quarter reportst 4 the directors are...

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