Pakistan Telecom profit plummets

Etisalat-controlled telco reports 24.7% drop in income due to lower call tariffs in more competitive market.

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By  Christina Corbett Published  September 16, 2007

Pakistan Telecommunications Company (PTCL) has reported a 24.7% drop in net profit during the 2006-2007 financial year as call tariffs have been lowered in an increasingly competitive telecoms sector.

PTCL recently announced a net profit of $258 million. Last year's figure was nearly $343 million. PTCL exercises a virtual monopoly over Pakistan's land lines and provides mobile and internet services across the country.

Etisalat acquired a 26% controlling stake in PTCL in 2005 for $2.6 billion under an agreement that gives it management control. Etisalat CEO recently told Arabian Business that "there is a lot of growth in Pakistan," comparing the country's potential expansion to that seen in China and India.

PTCL pays Etisalat 3.5% of its revenue in return for sharing technical expertise.

Rumours have been circulating that Etisalat was considering doubling its holding in PTCL to 51%. These have not been confirmed by Etisalat although Pakistan is said to have offered the Emirati company the rights to first refusal on the stake.

A deregulation policy introduced in late 2002 ended PTCL's monopoly in Pakistan and has allowed private companies to enter the telecoms market.

Despite competition though, analysts expect the company's profitability to grow with future network expansion.

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