Broadband subscription of Pakistan Telecommunication Company Limited (PTCL) is expected to be doubled to 1.5 million by FY13E, while broadband is also helping the company in retaining high Average Revenue per User (ARPU) subscription. It is believed that aggressive network expansion in more than 1,000 cities and now the introduction of entry-level tariffs should boost PTCL’s broadband segment and the company has focused its capex (capital expenditure) to upgrade its legacy network to NGN (Next Generation Networks), expand the fiber optic footprint and improve the quality of copper lines.
This has enabled the company to offer the largest XDSL (wireline) and EVDO (wireless) based broadband services in over 1,000 cities and towns across the country and attract 700,000 (600,000 DSL and 100,000 EVDO) subscribers. PTCL has launched one of the world’s first VDSL2 based broadband service with a top speed of 50 Mbps, in addition to the already available 10 Mbps connections and EVDO Rev B (wireless, top-sped of 9.3Mbps) to attract high-end users.
However, we believe the introduction of a new, basic 256Kbps package to entice low-end users should boost near-term subs growth at the expense of ARPU and lift revenue as latent multimedia-usage driven demand entices these users to upgrade to higher speed packages, said Muhammad Saqib Sajjad, Research Analyst at KASB Securities. Having said that PTCL’s growing focus on the corporate sector and the largest fiber optic network in Pakistan should lift wholesale segment revenue – that should further support parent topline.
It is to be noted that the company’s 9MFY11 earnings of Rs1.55 per share, down 13.8 percent annually did not report any change in the growth of broadband subscription, in fact it improved its share in the topline of the company. PTCL is the largest quadruple player in Pakistan, enjoying a 72 percent share in fixed-line, with a broadband footprint spanning over 1,000 cities and owning the third largest cellular operator (Ufone). The company’s privatisation began with the Deregulation Policy of 2003, wherein the transfer of 58 percent of management rights along with 26 percent of government holdings were transferred to UAE based telecom giant Etisalat.
