WORLDCALL TELECOM LIMITED

MARIAM NASIR
Manager Research
Dec 10 - 16, 2007

INTRODUCTION

Worldcall Telecom Limited is the largest fixed line payphone operator in Pakistan. It introduced the highly successful "Supervised Payphone" concept in Pakistan. It was also the first company to introduce prepaid calling card service in Pakistan. The payphone business of WTL have only recently been introduced and are cheaper and faster to deploy with extensive distribution network, highly trained sales and maintenance teams and position of market leader in the overall fixed and wireless payphones market. Whereas WTL calling card business international dialing service were introduced in March 1999 and domestic long distance dialing service on the same card were introduced in year 2000. It has an Intelligent Network platform capacity of over 25mn minutes per month.

GROUP

Worldcall Telecommunications Group began life in 1995 when First Capital Securities Corporation Ltd started incubating Worldcall Payphones, now Worldcall Telecom Limited. Next few years were spent in expanding payphone network across Pakistan and now, the Worldcall Group is one of the largest private telecom operators in the country with the most extensive and diversified telecom businesses. The businesses include Wireless Local Loop in over 40 cities, nationwide presence of long distance & international (LDI) network with 44 POPs, over 70,000 payphones, largest broadband HFC networks in Pakistan providing triple play (CATV, broadband internet, telephony), the pioneer prepaid calling card "Hello" and rights to dark fibers in a national long haul network being built across Pakistan.

Companies working under the Worldcall and First Capital Group are:

Telecom Division: Worldcall Telecom Ltd and Worldcall Telecom Lanka Ltd.

Property Division: Pace Pakistan Ltd, Pace Super Mall Ltd, Pace Woodlands Ltd, Pace Barka Properties Ltd, Pace Gujrat Ltd and Trident Construct Ltd.

Financial Division: First Capital Securities Corp. Ltd, First Capital Equities Ltd, First Capital Investments Ltd, First Capital Mutual Fund Ltd, Shaheen Insurance Co Ltd, Lanka Securities Ltd and Equity Partners Securities Ltd.

Media Division: Total Media Ltd, Media Times Ltd and World Press Ltd.

OFFER BY OMANTEL

Omantel is considering buying a Pakistani telecom company to expand outside its home market, where it lost its mobile phone monopoly in 2005 and will lose a fixed-line monopoly this year. The takeover would give Omantel access to Asia's fourth most-populous country as competition grows at home. Quite a few companies have spoken to Worldcall in recent months, but Omantel has probably been the most serious one. Omantel, the smallest telecom operator in the Gulf Arab region by market value, is also in negotiations to buy a minority stake in a Gulf Arab telecom operator.

FINANCIAL PERFORMANCE

Revenue earned by the company rose by 8% to Rs.1.18bn as compared to Rs.1.09bn in the same period last year. Cost on the other hand declined by 20% which gave healthy impetus to the gross profit which grew by 77%. Operating cost is almost at the same level due to management's continuing endeavors for best utilization of resources. However heavy increase in financial charges of the company by 67% to Rs.108m trimmed the profit before tax growth by 11% to Rs.164m as against Rs.192m last year. During the period under review the Company earned profit after tax of Rs.143.3m as compared to Rs160m which included a one-off gain on re-measurement of long term liabilities of Rs79.8m in the corresponding period last year.

RS. 000

1Q/FY07

1Q/FY08

CHANGE

Revenue

1,095,496

1,185,367

8%

Cost of Sales

775,269

617,498

-20%

Gross Profit

320,227

567,869

77%

Operating Cost

241,150

257,567

7%

Operating Profit

79,077

310,302

292%

Finance Cost

64,993

108,297

67%

Other Income

52,353

21,154

-60%

(Loss)/Gain on investments

46,658

16,800

-64%

LT Liabilities on current value

79,817

-

8%

Profit Before Taxation

192,912

164,051

-15%

Taxation

32,703

20,716

-37%

Profit After Taxation

160,209

143,335

-11%

Earning Per Share (Rs.) - Diluted

0.21

0.19

-11%

Gross Margins (%)

29.23%

47.91%

 

Operating Margins (%)

7.22%

26.18%

 

Net Margins (%)

14.62%

12.09%

 

FUTURE OUTLOOK

The recent acquisitions of the DNOP (Data Network Operators) illustrate the potential in data side employing segment and the company is working aggressively towards the goals set for the year such as arrangement of financing to fund the expansion plans to meet targets.