Pakistan Telecommunication Company Limited (PSX: PTC) has reported a net loss of Rs137.08 million (LPS: Rs0.03) for the third quarter ending September 30, 2024, marking a stark contrast from the profit of Rs660 million (EPS: Rs0.13) in the same period last year. The company’s bottom line turned negative despite a growth in revenues and improvements in gross profit.
Revenue and Gross Profit
PTCL’s revenues for Q3 2024 increased by 8.7% year-on-year (YoY), reaching Rs26.83 billion compared to Rs24.68 billion in the same period last year. The growth in sales was driven by higher demand for the company’s telecom services.
The cost of services rose by 5.74% YoY to Rs20.24 billion, but the increase was lower than the rise in revenue, leading to an 18.9% YoY improvement in gross profit, which amounted to Rs6.59 billion during the period.
Rising Expenses
While PTCL saw improvements in revenue and gross profit, the company faced challenges due to rising expenses. Administrative and general expenses grew by 6.41% YoY to Rs2.24 billion, while selling and marketing expenses surged 16.38% YoY to Rs1.26 billion. Additionally, the impairment loss on trade debts and contract assets jumped 34.18% YoY to Rs530 million, adding further strain to the company’s operating costs.
Despite these cost increases, PTCL’s operating profit saw a significant rise of 30.66% YoY, reaching Rs2.56 billion compared to Rs1.96 billion in Q3 2023.
Finance Costs Surge
A major factor contributing to the company’s net loss was the sharp increase in finance costs, which soared by 52.24% YoY to Rs6 billion. This increase was primarily due to higher interest rates in the current fiscal environment, which significantly affected the company’s profitability.
Other Income and Taxation
On the other hand, PTCL’s other income grew by 6.97% YoY to Rs3.18 billion, offering some relief. However, this was not enough to offset the impact of rising finance costs.
The company’s tax provision stood at Rs129 million, a notable decrease from the Rs327.72 million paid in the corresponding period last year, reflecting changes in the company’s taxable earnings.
Conclusion
Despite a strong performance in terms of revenue growth and operational improvements, PTCL faced significant challenges in Q3 2024, particularly from rising finance costs and expenses. These factors led to the company’s bottom line turning negative, reporting a loss of Rs137.08 million. With growing operational costs and the burden of higher interest rates, the company faces a challenging road ahead in maintaining profitability.
Key Financial Figures (Q3 2024)
- Revenue: PTCL’s revenue increased by 8.69% year-on-year (YoY), reaching Rs26.83 billion in Q3 2024, up from Rs24.69 billion in the same period last year.
- Cost of Services: The cost of services rose by 5.74% YoY, amounting to Rs20.24 billion compared to Rs19.15 billion in Q3 2023.
- Gross Profit: The company’s gross profit grew significantly by 18.90% YoY, reaching Rs6.59 billion in Q3 2024, as compared to Rs5.54 billion in the corresponding period of last year.
- Administrative Expenses: Administrative expenses increased by 6.41% YoY, standing at Rs2.24 billion, compared to Rs2.11 billion in Q3 2023.
- Selling & Marketing Expenses: These expenses saw a sharp rise of 16.38% YoY, totaling Rs1.26 billion in Q3 2024, up from Rs1.08 billion in the same period last year.
- Finance Cost: The finance cost surged by 52.24% YoY, reaching Rs6 billion, up from Rs3.95 billion in Q3 2023, primarily due to higher interest rates.
- Profit/Loss for the Period: PTCL reported a net loss of Rs137.08 million in Q3 2024, a significant decline from the net profit of Rs660.02 million in Q3 2023.
- Earnings/Loss Per Share: The company posted a loss per share of Rs0.03, compared to earnings per share of Rs0.13 in the same period last year.
