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TELE - FY23 Analyst Briefing Takeaways, (AKD Off the Analyst's Desk Nov 27, 2023)

TELE held its analyst briefing session today to discuss their FY23 performance. Brief from the session is provided below:

 

• Management’s focus remains to become an enabler for IT adoption and digitization, and become a one-stop shop for all clients. Furthermore, the company is focused on cyber security through Supersecure.
• Material developments during FY23 and 1st quarter of FY24 were acquisition of majority holding in Hallmark Company Limited by a subsidiary of Supernet on the main board of PSX, which was then subsequently acquired by Telecard. Furthermore, the Group is in the midst of a major restructuring to unlock Supernet’s true value, amongst other objectives.
• To achieve ease of trade in the GEM board, the PSX has proposed amendments to the GEM board listing regulations where, i) threshold for accredited investors is to reduce from PkR5mn to PkR1mn, and ii) the general public may be allowed to trade in the secondary market after six months of listing.
• During FY23, the company has managed to enter an exclusive alliance with Creatio, offering high end CRM (Customer relationship management) and workflow automation platform in Pakistan.
• Further, a managed infrastructure project was signed with an international donor agency covering 100+ locations across Pakistan, Supernet/Supersecure signed +PkR400mn worth of cybersecurity contracts with telecom and banking customers, Supernet signed a +PkR100mn telecom infrastructure contract with an oil & gas customer and a master sales agreement with a major Middle Eastern telecom operator for their global needs and other partnerships.
• In addition, IT infrastructure systems and support related business accounted for more than PkR700mn during the period.
• During the 1st quarter of FY24, TELE entered into a +PkR600mn agreement with a leading local bank, Supernet/Supersecure signed further cybersecurity contracts worth more than PkR220mn and delivered multiple orders, worth PkR20mn each on the infrastructure side. Furthermore, IT infrastructure support business accounted for almost PkR300mn during the period.
• Management is focused on unlocking Supernet’s value through multiple means, of which one of the routes is to switch the company to the main board of the PSX. However, they apprised that the situation is evolving at the moment, with the Group’s reorganization underway, the benefits will accrue soon. Hence, management did not stipulate a specific timeline for the process’ conclusion.
• The company is in the process of renewing its LDI (Long distance interconnect) license.
• As part of their legacy business of Wireless local loop operators (WLL), the company owns and operates some telecom towers (exact number undisclosed). However, this remains a non-core business area, but as part of the reorganization they are looking into the future utility and categorization of this area. The existing towers have a tenancy ratio of 2.5 presently.
• Management stated that direct US$ based services account for 23% of the revenues currently, whereas US$ pegged services account for much higher. Company is actively trying to increase share of direct US$ billings or US$ pegged billings in services to hedge against exchange rate volatility.
• It was stated that service and non-service revenues are majorly earned from the private sector as opposed to government contracts.
• Since the company is an enabler of services for ICT integration and IT adoption, any growth coming from government strategies will automatically help the company to reap benefits of any overall IT sector growth.
• To derive benefits from the immense growth potential in the MENA region, especially the Middle East, the company set up a wholly owned offshore company Phoenix Global FZE in the UAE to gain more international business. Management especially stressed on the growth potential within Saudi Arabia.