ASSIGNMENT NO 4: PTCL PARENTING STYLE AND PRIVATIZATION

OF UFONE

QUESTIONS
Q1: What is the parenting rational (style) adopted by PTCL? Justify your answer.
The parenting style adopted by PTCL is portfolio manager because they identified the under-
valued assets or business and improved them by divesting the low-performing business (Ufone).
PTCL aims to divest Ufone because it is not adding value to the business. Its performance was
declining and was affecting PTCL. It was 2nd or 3rd largest player in the market, but it became
the smallest of the four mobile operators because Ufone did not buy a 4G license when in 2014
3G and 4G spectrum was introduced while other mobile operators bought it. Even if in August
2019 Ufone launched 4G services, Ufone lost some of its best-paying customers to other mobile
operators (lost 1.3% of its subscribers, and revenue declined by 9%). So, Ufone has suffered
particularly badly, and the year 2014 was the last time Ufone made a profit. Ufone became a
liability for PTCL. PTCL spent a lot of money on Ufone due to Ufone's consistent losses and due
to its increasing working capital requirements and deteriorating balance sheet.
PTCL identified its undervalued assets, which is its infrastructure. PTCL has not yet entirely
focused its efforts on infrastructure, but selling Ufone would result in significant gains for the
company's existing shareholders. PTCL has excellent infrastructure, so after selling Ufone,
PTCL will focus its efforts mainly on infrastructure, making its fiber, towers, and other such
infrastructure accessible to the other mobile operators. They will be more than happy to contract
with PTCL for its infrastructure because before selling Ufone, other operators were reluctant
because they saw Ufone as a competitor. No one needs another telecom. What is required is
more fiber. PTCL selling Ufone will accelerate fabrication. This will rapidly become PTCL's
core business and can account for the dominant share of the company's business in the next few
years.