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Pakistan Telecommunication Corporation (PTC) has established in December 1990, taking over operations and functions from Pakistan Telephone and Telegraph Department under Pakistan Telecommunication Corporation Act 1991. This coincided with the Government's competitive policy, encouraging private sector participation and resulting in award of licenses for cellular, card-operated payphones, paging and, lately, data communication services. In 1994, the PTCL becomes the company limited (Pakistan Telecommunication Company Limited) by issued six million vouchers exchangeable into 600 million shares of the PTCL in two separate placements. Each had a par value of Rs. 10 per share. These vouchers were converted into PTCL shares in mid-1996. In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for PTCL monopoly over basic telecommunication sector in the country. It also paved the way for the establishment of an independent regulatory regime. The provisions of the Ordinance were lent permanence in October 1996 through Pakistan Telecommunication (Reorganization) Act. The year 2006-07 in the telecom sector was marked by the phenomenal growth in the mobile sector in Pakistan, which doubled its subscriber base to 60 million. The teledensity increased from 26% to 40%, helping to spread the benefits of communication technology across the country. PTCL ’s mobile phone subsidiary Ufone’s subscriber base grew by more than 87%, from 7.49 million to 14 million. The year also witnessed the entry of major telecom companies, most notably China Telecom and Singtel, into market. The privatization of the company was completed in the FY06, following the purchaser of 26% ‘B’ class ordinary shares by Etisalat International Pakistan L.L.C. EIP took over management control on 12th on April 2006. In short PTCL has been working vigorously to meet the dual challenge of telecom development and socio-economic uplift of the country. This is characterized by a clearer appreciation of ongoing telecom scenario wherein convergence of technologies continuously changes the shape of the sector. COMPANY BACKGROUND Pakistan has made steady pr ogress in expanding telecommunication networks and services in recent years. In Pakistan this industry had few big giants in the past with PTCL being the sole provider of landline telephone service in the country. At present the organizations principal activity is to provide telecommunication services all over the
country. It offers both domestic and international services throughout Pakistan. PTCL also manufactures telecommunication related equipment. Pakistan Telecommunication Company Limited had exclusive rights to provide basic telecom services in Pakistan till the end of year 2002. With the announcement of Deregulation Policy by the Government of Pakistan in 2003, PTA has issued licenses for basic telephony to the private sector in Pakistan who will be competing PTCL, the incumbent. From the humble beginnings of Posts & Telegraph Department in 1947 and establishment of Pakistan Telephone & Telegraph Department in 1962, to this very day, ours is a story of commitment and vision. PTC set sails for its voyage of glory in December 1990, taking over operations and functions from Pakistan Telephone and Telegraph Department under Pakistan Telecommunication Corporation Act 1991. This coincided with the Government's competitive policy, encouraging private sector participation and resulting in award of licenses for cellular, card-operated payphones, paging and, lately, data communication services. Pursuing a progressive policy, the Government in 1991, announced its plans to privatize PTC, and in 1994 issued six million voucher s exchangeable into 600 million shares of the would-be PTCL in two separate placements. Each had a par value of Rs. 10 per share. These vouchers were converted into PTCL shares in mid- 1996. In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for PTCL monopoly over basic telephony in the country. It also paved the way for the establishment of an independent regulatory regime. The provisions of the Ordinance were lent permanence in October 1996 through Pakistan Telecommunication (Reorganization) Act. The same year, Pakistan Telecommunication Company Limited was for med and listed on all stock exchanges of Pakistan Since then, PTCL has been working vigorously to meet the dual challenge of telecom development and socio-economic uplift of the country. This is characterized by a clearer appreciation of ongoing telecom scenario wherein convergence of technologies continuously changes the shape of the sector. A measure of this understanding is progressive measures such as establishment of the company's mobile and Internet subsidiaries in 1998. As telecommunication monopolies head towards an imminent end, services and infrastructure provider s are set to face even bigger challenges. Pakistan also entered post-monopoly era with deregulation of the sector in January 2003. On the Government level, a comprehensive liberalization policy for telecom sector is in the offing. PTCL is in full awareness of the same, and future policies feature a strong conviction of healthy competition. The company is in process of enhancing organizational and business proficiency through vertical integration and horizontal diversification. At the same time, crossnational ownerships, operations and partnerships are being evaluated with a view to developing and diversifying the business. RESTRUCTURING OF PTCL The government’s efforts to restructure and privatize PTCL have been on-again offagain since1991. It had an offer in the late 1990s for 26 percent equity, reputedly totaling $3 billion, but held out in negotiations and ultimately missed the unique global market window at that time. Since then, it has had difficulty attracting potential buyers.
Investors have been concerned about political risk, and appropriate support from the government to transform the utility into a commercially-oriented corporation. With fortunes rising in the local telecom sector, the government hoped to make privatization of the company a landmark deal for broader reform of the economy. A successful deal would demonstrate the governments increasing support for market capitalism and, it was hoped to, boost anemic levels of direct foreign investment. PTCL and the government were contemplating different strategic options for restructuring. Plans were vetted for both a geographic and functional split of operations. Analysts believed the most likely scenario is a break-up into three new companies, tracking with the firms largest business units: local, long distance and mobile. This approach mirrors the policy environment fashioned for new competitive entrants. From the government perspective, breaking up PTCL prior to as well-off will help curtail the market power of any one single service provider, thereby stimulating competition. Unbundling the sale was also likely to increase revenues for the government. The risk, of course, was that the mobile company, PTML (branded as ³Ufone´), was disproportionately more attractive than the other businesses. According to AKD Securities, PTML's contribution to PTCL's total revenues were expected to rise to 12.5% over the next five years í and was assumed to contribute 39% of PTCLs overall revenue growth. Future growth of mobile, both in terms of subscribers and net revenues, was considered to almost certainly outstrip demand for fixed line services. The target was to sell up to a 26 percent stake in PTCL; the government held 88 percent of $2.6 billion, and then any lowering of bid price in the revised agreement approved by the cabinet in March. The official documents state that the accumulated bidding price in the revised bid came down to $2.205 billion against the original Etisalat bid of $2.599 billion, said a report in the Gulf Today. The PTCl privatization agreement with Etisalat allegedly inflicted a further loss of billions of rupees to the national exchequer besides unprecedented concessions offered in the long term, indirect conflict with Article 30 of the Public Procurement Rules 2004, it said. By far, the PTCL has been the highest profit earning state-owned company with realestate assets worth billions of rupees across the country including commercial plazas, residential colonies and exchanges. According to the government documents, the Share Purchase Agreement (SPA) of the PTCLwith Etisalat lapsed in September 2005 after the non-payment of the dues by the winner bidders. After further negotiations with the Etisalat management, the government agreed to additional concessions and modifications to the transaction structure offer PTCL S CORE OBJECTIVES
The following are the long-term objectives of the organization.
Provision of Telecom services all over the country. Plan, establish and maintain telecommunication Acquire, promote and manage research and development, transfer of technology and software development including manufacturing of telecommunication equipment and plant Enhance efficiency, improve quality and expand the system to meet customer satisfaction and provide service on demand.
Create congenial climate for binding of human skill and horizon of employees through training and education. Convert its cash basis single entry accounting system to accrual basis double entry system meeting the commercial international accounting standards. To introduce computerized directory assistance and complaint services reform billing and a revenue collection system. Strengthen relation with foreign international administration, entities, services o providers, international and regional telecom organizations for better international o communication and technical cooperation in telecommunication business. Expand customer awareness of all value-added services of PTCL. To improve the efficiency of Customer Service Centers by deputing qualified persons who are well aware of public relation techniques.
Products and Services
PTCL Landline For local calls the code used is non-STD. For calls to other cities (e.g. Karachi to Lahore) the code is called STD. For International calls the code used is ISD. Dialing System When dialing on landlines, calls made within cities are considered local calls. Calls to other cities (e.g. Karachi to Lahore) are considered long distance calls and are metered according to distance. (e.g. When dialing to Lahore from Karachi you have to dial the code for Lahore then followed by the number of the destination, therefore you dial 0423XXX-XXXX ). For local calls, you just dial the local number. For international calls, you dial "00" followed by the country code. (e.g. For calls to the UK from Pakistan you dial 00 - 44 - XXXXXX ). PTCL V-fone It is a product which is wireless. We can use anywhere in Pakistan. Internet and web browsing is also its feature. It is under CDMA PTCL Broadband It is providing high speed internet browsing. DSL is now in top internet speed. Smart Services PTCL now a days providing smart TV service in different areas. Over 150 live channels are available to see with good picture quality.
Ufone (Pakistan Telecom Mobile Ltd) a wholly-owned subsidiary of PTCL commenced its operations on 29th January 2001 as a GSM 900 service provider. Since the outset, it has expanded its coverage and customer base at a rapid pace and established itself as one of the leading cellular service providers in Pakistan. Ufone is now considered to be one of the most active, aggressive and innovative players in the mobile sector of Pakistan.
The growth of the cellular industry is a direct result of the successful implementation of the telecom deregulation and cellular mobile policy by the Ministry of IT and Telecommunications (MOIT&T) and the support, guidance and timely enforcement of regulatory process by the Pakistan Telecommunication Authority (PTA).
The growth of the cellular sector in Pakistan can also be attributable to good governance policies of the government of Pakistan and the Privatization Commission. In April 2006, Emirates Telecommunication Corporation, which is commonly known as Etisalat, has assumed management control of Pakistan Telecommunication Corporation Ltd – part of the $2.6bn deal to buy a 26% stake in PTCL. The successful privatization of PTCL, and consequently Ufone, is hailed as ushering in a new era for telecommunications in Pakistan. Now, under the management of Etisalat, Ufone will concentrate on customer needs and benefits and is more determined than ever to be the leading cellular player in the market. Ufone has been known for providing superb propositions and quality service to its customers. With the new expected investment, Ufone can now aggressively expand its network coverage. FINANCE & ACCOUNTING SYSTEM OF PTCL The PTCL FINANCE & ACCOUNTING system is actually divided into three wings. 1- FINANCE 2- ACCOUNTS 3- REVENUE 1) FINANCE The SEVP (FINANCE) is concerned with the makeup of the all type of financial decisions especially in the context of acquisition, financing and management of all assets with some goal in mind. The EVP (Finance) with the General Manager (Finance) extend their expertise in the decision making process. 2) ACCOUNTS Here the SEVP (Finance) is once again concerned by heading the EVP(ACCOUNTS) and General Manager (Accounts) to deal with all Accounts Decision. In PTCL the Finance and Accounting are so correlated but the difference between finance and Accounting is the method of Funds Recognition and the decision making. In the Accounting the Director Accounts in the PTCL Regions assist the higher management. 3) REVENUE Here the SEVP (Finance) is once again concerned by heading the EVP (Revenue) and General Manager (Revenue) to deal with all Revenue matters. One Director Revenue within the Region assist to implement and control the inflow of Revenue and Reconcile it with the PTCL Headquarters Islamabad. The PTCL is actually the Revenue Generation organization. PTCL Collect the Revenue from the following modes. Revenue from System Billing of Land Line Numbers. a) Through Line Rent of Land Line Numbers. b) Through National wide dialing from LLN’s (Land Line Numbers) c) International dialing from LLN’s
d) Providing Value Added services to customers. Like UAN (Universal Access Numbers), PABX (Private Auto Branch Exchanges),VPN( Virtual Private Network) Bandwidth of ISP’S (Internet service providers) e) PTCL has its three subsidiaries PAKNET (leading ISP in the country), UFONE (unique cellular phone company in Pakistan), TF (Telecom Foundation) the leading foundation for the welfare of employees of Telecom Sector. ACCOUNTING SYSTEM OF PTCL In PTCL the rules contained in the special volume of the PTCL under which the SEVP (FINANCE) is responsible for creating the procedure of Accounting matters. CAPITAL RECEIPTS SIDE. REVENUE FROM BILLING SYSTEM a. Revenue from Usual customer. b. Revenue from DXX System c. Revenue from DSL System d. Revenue from PABX/PBX System e. Revenue from Card Phone Operators f. Revenue from IPOs Internet service providers g. Revenue from Mobile Phone Operators h. Co-location charges from various companies REVENUE FROM OTHER a. Revenue from Overseas calls (Incoming) b. Revenue from Premium PRS (0900) calls c. Income from Dismantle Exchanges d. Revenue from MDF used by other companies CAPITAL EXPENDITURES INSTALLATION OF NEW EXCHANGES Expenses of installation of new Exchanges are the major capital expense of PTCL because PTCL purchases the new telephone exchanges from France, Italy, Germany and China. So heavy cost is to be paid for purchasing process in order to proper margin. Each exchange having different capacity and due which each Engineer should has to be trained accordingly so expenses rises on purchasing of new Telephone Exchanges. This is the main expense of PTCL. EXTENSION OF EXISTING EXCHANGES The extension of the existing exchanges is the dire need as the density of the population is increasing day by day and in order to fulfill the basic communication and fill the communication gap PTCL has to extend its normal Telephone Exchanges in accordance with the demand and per paid connection. So PTCL sustain heavy expenses on the extension of exchanges. MINOR EXPENDITURES INTERNAL AUDIT AND TECHNICAL INSPECTION The PTCL has sustained huge amount in context of internal audit both Accounts and Technical from various agencies. For example M/s Ferguson conduct both internal audit and external audit and payment made to auditors in the expenses of the company. ADMINISTRATION AND CONTROL EXPENSES Some time in the best interest of company, some expenses could be occurred for example if there is need of induction of a financial analyst in one region or if there is
need of an Engineer then transfer and posting order can be issued and traveling and training expenses could be realized to employees. SALARIES OF STAFF The monthly salary of the staff is rest with the approval of PTCL H.Q Islamabad. PTCL is spending lot of amount on the salaries. .
FINANCE SYSTEM OF PTCL
PTCL has magnificent finance structure; it is basically Product Oriented organization so here, the Revenue is the Life Blood as such for any other profit seeking organization. So we should have isolated the Revenue from Finance side or either we should consider the Finance in the context of Revenue. Finance activities can be evaluated in terms of PTCL’s basic financial statements analyzing through
On PTCL HQ Islamabad, SEVP (Finance) is, who with the concurrence with the CEO for making all the Finance Planning that’s way the PTCL has to inject the money in order to boost up the business and in order to complete the stiff competition faced in the telecomm sector. Before taking any decision regarding financial planning the draft could be presented before the Board of Governors. In this section there is need of financing either in the WLL (wireless local loop) sector or wire-line or mobile operator services.
Managing the PTCL’s Asset structure
PTC is very organized organization and it has also its fixed as well with the current asset. So there are many experts in order to keep the eye watch on the PTCL infrastructure, for example Director (Fixed Assets) is responsible for the maintenance and repair of the building and machinery on the Regional level.
Managing the PTCL’s financial structure
PTCL financial structure is in the safe hands the basic qualification for the post of Assistant Accounts Officer is MBA (Finance) and for the SEVP (Finance) the incumbent should possess the degree of MBA with ACMA & CA. Due to such fresh blood the young and energetic financial management taking some bold decision the results of which are awaited up till.
FUNDING OF PTCL
MOBILIZATION OF FUNDS
PTCL mobilized its funds with following ways. 1) Purchase the new imported infrastructure like new Exchanges etc PTCL mobilized its finds mostly in the purchase of new telephone exchanges from abroad (France, Italy & China). There is also purchase of accessories of telephone exchange generators and other equipments. 2) Capital expenditure for the organization. There are various expenses for the PTCL in the context of capital expenditure that has already been mentioned in previous pages.
3) Purchase and acquisition of stores. PTCL store items are very important components i.e Stationery, stand-by Exchanges, generators, barites and other equipments. PTCL spend lot of funds on these items. 4) Loan and advances to others, and re-investment. There are offering of Loan and advances to the employees on various rates according to the length of services on roll. This is the main source of mobilization of funds. 5) Payment of dividend to the stockholders. Payment made to the shareholders in the context of dividend to be paid to the shareholders. PTCL has currently announced the divided of Rs.32/per share. 6) Salaries of the staff all over the country. Obviously services rendered by the staff and in this way PTCL has to pay handsome amount to their staff, those are the main source of generating the revenue. 7) Annual Bonus to employees. PTCL pays annual Bonus of Rs. 12000/- to its employees on the Eid occasion. 8) Security deposits, Transfer of Company’s Land & Building. Where PTCL does not find any building or land then security deposit may be paid to the private landholders for the installation of PTCL infrastructure. 9) Insurance of the Company PTCL offers the insurance from its own side in case of death and medically unfit of its employees. 10) Pension, graduate, and other fringe benefits. For the pension and gratuity of the retire official PTCL mobilized its funds accordingly. 11) Supply of Furniture and Fixtures to the office buildings. This is the responsibility of the Management to be provided the furniture and fixture to the office buildings accordingly. 12) Renovation, alteration, and rental charges of privately owned buildings. PTCL has to pay the handsome amount for renovation and alteration of existing building and the charges of privately owned builders are being issued accordingly. GENERATION OF FUNDS 1. Amount Realized from System Billing. 2. Amount Realized from defaulters. 3. Revenue from Value-added Services. 4. Bandwidth facilities provided to the companies. 5. Earning from DXX, PSTN, PABX, VPN, PRI & ISD. 6. Media used by cellular and pay-card companies and earn royalty. 7. Earning from subsidiaries PTML, PAKNET & TF. 8. Amount realized through co-location charges. 9. Basic Rate Interface provided to the subscriber. 10. International dialing customers. 11. Corporate Billing customers, valued customers. 12. Earning from MTR mobile Termination Rate. 13. Earning from Incoming Overseas Calls in shape of premium from overseas
SOURCES OF FUNDS OF PTCL Cash generated from operations In this context we can say that PTCL usual earning lot much more depends upon the usual earning from Telephone number and payments of the bill thereof, this is the primary source of funds of PTCL. Security deposits Various pay card companies like Dancom, World call, Pearl Tel, Soft tech, deposited huge amount as the securing deposit in the books of PTCL for the media that is being used by these companies. PTCL is utilizing these security deposits. Return on deposits After payment the dividend to the share holders and having paid the income tax on the profit the surplus amount is being used in the deposits of various national and multinational banks from where ROD is received accordingly. Dividend Income PTCL some time itself purchases the share from the open market and earn the dividend income thereof. It is also possibly that PTCL if applicable may detain the shares of different other companies and earn the dividend. Sale proceeds of fixed assets The defunct and dismantle Telephone exchanges not allowed re-sell to the other underdeveloped countries and gain profit. PTCL is also not in the process of planning to be used the idle land, which could be used on commercial basis by other parties. Long- Term Investment There are various long-term project of PTCL. BLT is one of them. PTCL is now expanding its business through the United Arab Emirates by consortium and through the joint venture with other telecom operators. PTCL has also some long-term investment in the AT&T (American Telephone & Telegraph) and ZTE (Zehwing Telecom Engineering Company China). Long-Term Loan to others PTCL has also offered long term loan agreement to other Telecom provider companies. PTCL is providing its expertise and Engineers to them and also offering amount to be invested on behalf of PTCL for example PTML Pakistan Telecom Mobile Limited and Paknet the Internet providers company. Loans, advances, deposits, prepayments and other receivable In this context all the referred point and return thereof will be called the receivable. ALLOCATION OF FUNDS Against all purchase orders issued by the PTCL H/Q’s Islamabad payment made after allocation of Funds which further allocated by the Regional offices. The funds usually allocate in order to manage the following: 1. Capital expenditure 2. Purchase of infrastructure like new exchanges. 3. Launching of new Product. 4. Human resource development 5. Transportation expenses, misc expenses 6. Domestic and overseas training of staff 7. Bonus to the employees, house/building advances, motor car/motor cycle advances.
8. Worker compensation fund, benevolent fund contribution general provident fund 9. Maintenance of buildings, vehicles, fixed assets. 10. Default situation of subsidiaries. Allocation of Funds for Marketing exploration 19% of net profit Allocation of Funds for Research & development 18% of net profit Allocation of Funds for Human resources & Admn 33% of net profit Allocation of Funds for Corporate affairs 30% of net profit
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