PTCL tightens grip on broadband sector

KARACHI – Pakistan Telecommunication Company Limited (PTCL), on the back of its fixed line infrastructure, continues to hold the largest share in Digital Subscribe Line (DSL) market segment, as its share has grown from 76 percent in Financial Year 2009 to 88.5 percent in FY10 as its customer base more than doubled to reach 422,000.
Moreover, the company under Universal Service Fund (USF) was allocated a project to provide 64,000 new DSL connections in the rural areas of Southern Punjab. The company has also increased its presence in wireless broadband segment through the introduction of EVDO (Evolution, Data Optimized) services which saw its base grow nearly four times to reach 52,387.
Furthermore, the company also launched EVDO Revision B with a speed of 10Mbps.It is expected that PTCL’s broadband subscriber base will reach to 0.72 million by FY11 from 0.52 million in FY10. The revenues contribution from the broadband sector is expected to hit Rs 7.6 billion which will raise impact on its percentage share in total revenues which is expected to rise from 6.6 percent in FY10 to 7.5 percent in FY11 and play an important role in supporting the company’s unconsolidated top-line as contributions from the fixed line segment is steadily falling. Broadband connections have grown by four times since FY08 to reach 0.99 million by October 2010, as DSL technology continues to hold approximately 50 percent share in the total subscriber base. However, growth in other broadband wireless segments (WiMax and EvDo), which are considered future of broadband because of their efficient and technological advancement, have outpaced fixed line technologies.
In March last year, PTCL acquired Maskatiya Communications (Maxcom) in that was involved in the business of providing broadband (DSL) services in Karachi and some parts of Hyderabad. According to the company the customer base of Maxcom currently stands at 6,000.
This acquisition is being done on revenue sharing basis, from March 2010 to August 2012. The cumulative amount during this period would become consideration for this acquisition. PTC booked payable of Rs 74.5 million by end of FY10.
‘We believe that after the expiry of revenue sharing agreement the company would merge Maxcom subscribers and assets with its broadband segment,’ said Faisal Khan at AHL.
By end of FY10, the total number of Universal Services Fund (USF) contracts awarded to PTCL reached 13 including pilot project for increasing broadband penetration in Faisalabad Telecom region (FTR) – excluding Faisalabad city. The Faisalabad project is expected to generate 72,500 new DSL connections covering 7 districts of FTR.
However, as PTCL crossed the 50 percent accumulated subsidy benchmark; it will result in a restriction of allocation to any further project under USF. This will last till the benchmark is reduced to required levels. Additionally in bid to expand its product categories, PTCL is also offering vale added services like Smart TV.