RISING PROFITS OF PTCL
TARIQ AHMED SAEEDI (firstname.lastname@example.org)
Oct 05 - 11, 2009
Pakistan Telecommunication Company Limited that claims for being carrier of the carriers registered a phenomenal profit for the year ended June 2009. The revenue decline in the financial year (2008-09) did not affect profitability of the only landline telecommunication service provider in Pakistan. It is however an ordinary development for telecom experts belonging to the company. According to general statements, Pakistan Telecommunication Company Limited (PTCL) earned profits in the face of stiff competition posed by telecom rivals because of the insurmountable specialty of the company on network and infrastructure development across the country.
PTCL's profit after tax (net) stood at Rs9.15 billion as on June 2009 while in the previous year it sustained a heavy loss of Rs2.82 billion. The company earned profits for the year ended June 30 despite decline in its revenue 11 percent to Rs59 billion over Rs66 billion in financial 2007-08. Industry analysts believe that reduction in volume of severance pays last year left a buffer for profit to escalate.
Ali Qadir Jilani executive vice president corporate communications PTCL says impact of voluntary separation scheme (VSS) was pronounced with full enormity during FY08 than in last year (2008-09), therefore making this a reason for up in profits is not a realistic approach. It is relevant to recall that UAE-based management of the telecom giant announced voluntary separation scheme after buyout to reduce cost on business operation of workforce, which was estimated at approximately 53,000 at the time of privatization deal. It was determined of augmenting competencies of staff by going in to attrition. The management put before permanent employees an option to opt for premature retirement by offering them certain compensations. While many agreed to severance pays, others did not choose this option and remained with the company. The conflict on VSS between management and bargaining agents continues with union (workers) worried about implications of layoffs and management executing curtailment in operational costs.
VSS is not an inexpensive decision either for the management of PTCL since it causes considerable costs to the telecom service provider. The cost of VSS however was low in the period under review. It does make sense certainly then why PTCL made profits for the year just passed. It expensed out only Rs23 billion on account of the scheme in FY09 while it coughed up around Rs90 billion in the previous year. UAE-based Emirates Telecommunication Corporation, known as Etisalat, bought 26 percent shares of PTCL from the government of Pakistan in April 2006 under a 2.6 billion US dollars deal. Following privatization, the management decided to make operational expenses in shape and placed human resource on the anvil to begin with. While it is increasing bonuses and allowances, unpopular retirement options overshadow workers welfare prone programmes.
From the beginning, the restructuring has never been easy since the management confronted with strong protests from employees against VSS, who termed this forced layoffs in the disguise exercised to downsize workforce. Apart from this perspective, this load shedding made the company to redeem falling subscriptions of fixed lines, a pioneer business segment. PTCL is the only provider of wired telephony services to widespread areas in the country. Fixed line has been its signature service for years before its extension of product lines to level its services with prolific competitors offering multiple telecom services.
Overwhelming entry of private and foreign telecom companies that offer telephone and internet services with customer convenience and price benefits might be one of the reasons of dropping market shares of fixed line. Cellular services are giving tough time to retrieval of market share of fixed line despite the fact that PTCL is offering incentives to win back lost market share. Rate of fixed line subscription declined following arrival of multiple substitutes to fixed line. Popular use of cellular phones and WLL increased the rate with which fixed line users unsubscribed. PTCL has recently introduced programs to get back market share. Waiver of Rs500 restoration charges on landline is one of such bets. Double up unlimited package, which promises dual services of telephony and internet may be another smart strategy by which customer traffics toward fixed line can rev up. Activation of this service requires fixed line.
The vigorous marketing approach is an indication of the company's covert desire to make fixed line main revenue earner. Ali Jilani is not sure of prospective growth rate of landline subscription. However, "We will keep on increasing expenditures on upgradation and improvement of infrastructure and network," he tells this correspondent adding the impact of last year's investment remains to be seen. He says investment on network would dispense financial outcomes this year.
PTCL has already an edge over other telecom service providers in terms of its widespread network. It has laid 10,400 km fiber optics network connecting over 840 cities and towns and installed over one million lines. Broadband has become a prime revenue generator for the company for last couple of months. The market response to the internet service launched by the company is manifestation of customers' unshared loyalty to pioneer telecom service provider, which for long enjoyed monopoly in telecom sector and long history to have cultivated deep-roots. A lengthy period of existence and state support strengthened the technological dominancy of the company in the market. New companies have to make huge investments to break into premier zone of PTCL, broadband of which is also acquiring clienteles rapidly and in a short span broadband clouded 150 cities and towns across Pakistan and its customers exceeded 150,000. In wireless local loops and wireless internet services, however, there has emerged a healthy market competition bringing improvement in customer services. Still, PTCL claims to be largest CDMA operator with 1.25 million V-fone customers covering area of 10,000 urban and rural areas.
HP EXPANDS ITS NETWORKING PORTFOLIO
HP has expanded its networking portfolio with new HP ProCurve offerings integrated with HP BladeSystem infrastructure solutions that enable customers to increase performance, security and management of both physical and virtual environments.
The new offerings include the HP ProCurve 6120 series designed to leverage the award-winning HP BladeSystem infrastructure and an expansion of the HP ProCurve 8200 and 5400 Ethernet switch portfolio. Also included in the announcement is a firmware upgrade to HP Virtual Connect that allows users to change bandwidth on the fly to respond to fluctuations in application requirements.
"The integration of HP ProCurve Networking blade switches with the HP BladeSystem infrastructure is a pivotal change for HP as the company aggressively diverges itself from the competition," said Nick Lippis, president of analyst firm Lippis Enterprises. "These new HP solutions provide customers the proven reliability of standards-based computing, in addition to lowering maintenance and operational costs."
INCREASED NETWORK FLEXIBILITY
To further strengthen the business benefits delivered by HP BladeSystem, HP ProCurve is offering two new standards-based blade switches that increase service quality, lower costs and reduce risks in the data center.
ï To reduce complexity and deliver investment protection, the 10Gb HP ProCurve 6120XG Blade Switch is designed to meet the demands of virtual machines and high-performance applications. When combined with the HP ProCurve Data Center Connection Manager, the switch delivers automated network connection management and provisioning. Engineered with emerging network standards in mind, the HP ProCurve 6120XG Blade Switch is Converged Enhanced Ethernet (CEE) ready, enabling integration of Ethernet and Fibre Channel networks in the future.
ï To simplify the transition from 1Gb to 10Gb, the new HP ProCurve 6120G/XG Blade Switch seamlessly integrates a mix of legacy network equipment in the data center. This allows customers to maximize return on investment for their existing environments.
To address mission-critical local area network (LAN) access, midsize LAN and data center networking, HP ProCurve extended the connectivity and design options for the 8200 and 5400 switch families. Customers with unified communications and video surveillance can use high-capacity Power over Ethernet (PoE+) to reduce costs while lowering power consumption. The new offerings also expand HP ProCurve's unified networking approach by using common architecture, security and management tools across the portfolio.
These new switches offer customers more affordable networking options over competing solutions and are backed by the ProCurve Lifetime Warranty.
IMPROVED VIRTUALIZATION MANAGEMENT WITH SIMPLIFIED CONNECTIVITY
To reduce network complexity, lower connectivity costs and offer flexibility for deploying a data center technology infrastructure, HP enhanced its innovative Virtual Connect portfolio. HP Virtual Connect with HP BladeSystems reduces acquisition costs up to 66 percent. New customer benefits include:
ï Twice the Fibre Channel bandwidth at a lower cost per 8Gb port than competitive offerings with HP Virtual Connect 8Gb 20-Port Fibre Channel Module. The solution is ideal for virtualization and other high-performance applications.
ï Increased network flexibility from the new Virtual Connect Firmware Update with Virtual Connect Flex-10. This allows users to dynamically change network connections and adjust bandwidth without rebooting the server. It also provides expanded support for up to 128 virtual local area networks (VLANs) to improve delivery of infrastructure-as-a-service deployments, as well as enhanced network diagnostics to simplify management.
HP channel partners also will benefit from an enhanced portfolio of networking options to offer customers. Additionally, they can leverage the extensive an installed base of more than 1.5 million blade units to drive new HP ProCurve sales opportunities.
"Virtual sprawl has been an ongoing challenge for customers, adding unnecessary complexity and management costs that take valuable resources away from business innovation," said Neal Clapper, vice president and general manager, Enterprise Storage and Servers, HP Asia Pacific and Japan . "By delivering a converged solution that is easier to manage, higher performing and reduces costs, HP is eliminating these challenges, allowing customers to focus their efforts on growing the business, today and in the future."
REDUCED RISK WITH PROVEN METHODOLOGY AND INVESTMENT ADVICE
HP also announced enhancements to its HP Adaptive Infrastructure Maturity Model (AIMM) for both end-users and channel partners. The maturity model includes new tools that help customers improve return on investment by providing the information needed to make informed technology purchase and operational decisions.