You are on page 1of 26

PAKISTAN TELECOMMUNICATION COMPANY LTD.

CONTENTS
Board of Directors
2 3 4-5 Condensed Interim Financial Statements

8-9

10

11

12

13-15

Condensed Consolidated Interim Financial Statements

18-19

20

21

22

23-25

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

Board of Directors
Naguibullah Malik
Chairman PTCL Board Secretary (IT & Telecom Division) Ministry of Information Technology Government of Pakistan Islamabad.

Abdulrahim A. Al Nooryani
Chairman & Chief Executive Officer Etisalat International Pakistan L.L.C Executive Vice President (Contracts & Administration) Etisalat, UAE.

Mushtaq Ahmad Bhatti
Member (Telecom) Ministry of Information Technology Government of Pakistan Islamabad.

Khurshed Ahmed Junejo
Ambassador Embassy of Pakistan Abu Dhabi, UAE.

Salman Siddique
Secretary (Finance) Ministry of Finance Government of Pakistan Islamabad.

Abdulaziz A. Al Sawaleh
Chief Human Resources Officer Etisalat, UAE.

Fadhil Al Ansari
Executive Vice President (Engineering) Etisalat, UAE.

Abdulaziz H. Taryam
General Manager (Northern Emirates) Etisalat, UAE.

Dr. Ahmed Al Jarwan
General Manager/eRE Etisalat, UAE.

Farah Qamar
Company Secretary

2

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

Corporate Information
Management
Walid Irshaid
President & Chief Executive Officer

Muhammad Nehmatullah Toor
S.E.V.P (Finance) / CFO

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

Sikandar Naqi
S.E.V.P (Corporate Development)

Naveed Saeed
S.E.V.P (Commercial)

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

Tariq Salman
S.E.V.P (Business Zone North)

Abdulla Yousef
S.E.V.P (Business Zone South)

Hamid Farooq
S.E.V.P (Special Projects)

Javed Mushtaq
Chief Information Officer (C.I.O)

Company Secretary
Farah Qamar

Legal Affairs
Zahida Awan Ghulam Mustafa

Auditors
A.F. Ferguson & Co. Chartered Accountants Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

Bankers
Allied 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

Registered Office
PTCL Headquarters, Sector G-8/4, Islamabad-44000, Pakistan. Tel: +92-51-2263732 & 34 Fax: +92-51-2263733 E-mail: company.secretary@ptcl.net.pk Web: www.ptcl.com.pk

Share Registrar
M/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

1st Quarter Report

3

PAKISTAN TELECOMMUNICATION COMPANY LTD.

Directors' Report
The Directors are pleased to present their report together with the unaudited 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
4

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

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 Chairman PTCL Board Islamabad: October 27, 2010

Walid Irshaid President & CEO PTCL

1st Quarter Report

5

feel the difference

Condensed Interim Financial Statements

PAKISTAN TELECOMMUNICATION COMPANY LTD.

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

Note

September 30, 2010 Rs ‘000 (Un-audited)

June30, 2010 Rs ‘000 (Audited)

5

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

8

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

September 30, 2010 Rs ‘000 (Un-audited)

June30, 2010 Rs ‘000 (Audited)

Fixed assets

1st Quarter Report

9

PAKISTAN TELECOMMUNICATION COMPANY LTD.

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

September 30, 2010 Rs ‘000

September 30, 2009 Rs ‘000

13

10

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

CONDENSED INTERIM STATEMENT OF CASH FLOWS

Note

September 30, 2010 Rs ‘000

September 30, 2009 Rs ‘000

10

11

13

1st Quarter Report

11

PAKISTAN TELECOMMUNICATION COMPANY LTD.

12

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)
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 (Reorganization) 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). 13

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

6.

Property, plant and equipment
7

September 30, 2010 Rs ‘000 (Un-audited)

June 30, 2010 Rs ‘000 (Audited)

7.

Operating assets
7.1

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.

9.

Transactions with related parties

September 30, 2010 Rs ‘000 (Un-audited)

September 30, 2009 Rs ‘000 (Un-audited)

9.1

September 30, 2010 Rs ‘000 (Un-audited)

June 30, 2010 Rs ‘000 (Audited)

14

1st Quarter Report

PAKISTAN TELECOMMUNICATION COMPANY LTD.

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.
September 30, 2010 Rs ‘000 (Un-audited) September 30, 2009 Rs ‘000 (Un-audited)

10. Cash generated from operations

Effect on cash flows due to working capital changes:

11. Cash and cash equivalents

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.

1st Quarter Report

15

The most robust & capable network

Only service provider to introduce interactive IPTV Quadplay packages offering IPTV, Broadband, PSTN & online security surveillance Online “BUZZ” gaming and infotainment portal “Easy Learning”- education portal with internationally recognized diploma

Biggest Network – 1000 cities

Most flexible bandwidth packages

1. 2. 3. 4. 5.

Economical student packages for online education

6. 7. 8. 9.

The largest satisfied customer base

10 . 10 Mbps with true download & upload speeds like no one else

For subscription or activation call 0800 8 0800
feel the difference

Pakistan Telecommunication Company Ltd.

www.ptcl.com.pk

Condensed Consolidated Interim Financial Statements

PAKISTAN TELECOMMUNICATION GROUP

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, 2010 (UN-AUDITED)

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.

18

1st Quarter Report

PAKISTAN TELECOMMUNICATION GROUP

Note

September 30, 2010 Rs ‘000 (Un-audited)

June 30, 2010 Rs ‘000 (Audited)

Fixed assets

1st Quarter Report

19

PAKISTAN TELECOMMUNICATION GROUP

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)

September 30, September 30, 2010 2009 Rs ‘000 Rs ‘000

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

20

1st Quarter Report

PAKISTAN TELECOMMUNICATION GROUP

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

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

September 30, 2010 Note Rs ‘000

September 30, 2009 Rs ‘000

6

7

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

1st Quarter Report

21

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

PAKISTAN TELECOMMUNICATION GROUP

22

1st Quarter Report

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

PAKISTAN TELECOMMUNICATION GROUP

NOTES TO AND FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2010 (UN-AUDITED)
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). 23

1st Quarter Report

PAKISTAN TELECOMMUNICATION GROUP

September 30, 2010 Rs ‘000

September 30, 2009 Rs ‘000

non-cash charges & other items:

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:

Rs ‘000

Rs ‘000

Rs ‘000

8.1.1 Inter segment revenues are eliminated on consolidation.

24

1st Quarter Report

PAKISTAN TELECOMMUNICATION GROUP

8.2 Assets & liabilities of the Group's operating segments as at September 30, 2010 and June 30, 2010 are tabulated below.
Rs ‘000 Rs ‘000 Rs ‘000

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.

1st Quarter Report

25

Notes

1st Quarter Report