EUR 24.40 For Business Accounts Only

Pakistan Telecommunication Co. (PTC): 1Q2018 EPS Rs0.2, down 10% YoY (In-line with expectations)

• PTC posted EPS of Rs0.2 in 1Q2018, broadly in-line with our expectations. Earnings were down 10% primarily owing to 83% YoY increase in financial charges.
• PTC’s core revenues witnessed marginal increase while consolidated revenues were up 4% YoY in the outgoing quarter.
• As of Feb, 2018, Digital Subscriber Line (DSL) stood at 1.6mn, up 1% since Dec 2017 while Evolution Data Optimized (EvDO) subscribers declined by 6% during the same period to 0.5mn. As of Feb 2018, total broadband subscribers in Pakistan reached 53.6mn where Mobile BB stood at 51mn. 
• Growth in PTC’s 1Q2018 consolidated revenues was supported by increase in revenue of its subsidiary company (Ufone). Ufone reported revenues of Rs12.5bn, up 10% YoY. To point out, Ufone’s NGMS showed growth of 5% to 6mn subscribers as of Feb 2018, up 5% since Dec 2017.
• As of Feb 2018, Pakistan’s annual cellular subscribers reached 147mn where Ufone’s market share stood at 37%.
• We flag 1) competition in mobile subscribers impacting Ufone’s subscriber base, 2) decline in EvDO & DSL subscribers not offset by increase in Ufone’s 3G subscriber share, and 3) stagnancy in company’s legacy business, that is fixed line, as key risks associated with PTC.