Causes and Remedies of Privatization of PTCL

INSTITUTE OF BUSINESS AND TECHNOLOGY
Causes & Remedies of Privatization of
PTCL
Prepared By
Syeda Erum Zehra Abbas
(BME / 887)
Ayaz Hussain
(BME / 771)
Syed John Abbas Zaidi
(BME / 850)
Course Code : MKT-606
A project in partial fulfillment of the award of
MBA (Banking and Finance)
FACULTY OF MANAGEMENT SCIENCES
SPRING 2011

Causes & Remedies of Privatization of PTCL
Institute of Business & Technology
INSTITUTE OF BUSINESS AND
TECHNOLOGY
ABSTRACT SUBMITTED BY: Syeda Erum Zehra Abbas, Ayaz
Hussain & Syed John Abbas
Zaidi
DISCIPLINE: MBA (Banking & Finance)
TITLE OF PROJECT REPORT: Causes & Remedies of
Privatization of PTCL
MONTH OF SUBMISSION: April, 2011
NAME OF PROJECT SUPERVISOR: Dr. Noor Ahmed Memon
Abstract
Privatization is process by which transfer of ownership from government to
private business is occurred. The report highlights the facts and figures that lead
Pakistan Telecommunication Company Limited towards privatization. The
technological development was the reason for which the decision had taken. The
company’s culture and environment has changed and it has started struggle for
managing itself in this modern competition. The problems that were major to be
solved for getting the path of competition solved. New products and services
have been started offering by the company. In the end we would like to conclude
that the research focuses on the results which were making the fluctuations in
the company’s financial position due to privatization.

ACKNOWLEDGEMENT
At the completion of our research project we would like to thank Almighty ALLAH
for giving us the power, energy and guidance to do this research study.
We would then like to thank our course instructor, Dr. Noor Ahmed Memon for
giving us this opportunity to carry out this project. We would also like to thank our
BIZTEK Director, Mr. Ijaz for all his help and guidance.
Last but not the least, we would like to thank our family and friends for being
there for us whenever we needed them and for bearing with us all the way
through.
Syeda Erum Zehra Abbas,
Ayaz Hussain, &
Syed John Abbas Zaidi.

CONTENTS
Page
ABSTRACT
ACKNOWLEDGEMENT
CHAPTER NO.01 INTRODUCTION
1.1 Introduction..............................................................................................02
1.2 Purpose of Study.....................................................................................02
1.3 Research Objectives ...............................................................................02
1.4 Research Methodology............................................................................03
CHAPTER NO.02 LITERATURE REVIEW
2.1 Literature Review.....................................................................................05
CHAPTER NO.03 PAKISTAN TELECOMMUNICATION
COMPANY LIMITED (PTCL)
3.1 Introduction to PTCL................................................................................09
3.2 Growth.....................................................................................................09
3.3 Core Values.............................................................................................11
3.4 Mission ....................................................................................................12
3.5 Vision.......................................................................................................12
3.6 Services & Products ................................................................................13
CHAPTER NO.04 PRIVATIZATION
4.1 Introduction..............................................................................................18
4.2 Types of Privatization ..............................................................................18
4.2 Privatizations in Pakistan.........................................................................19
CHAPTER NO.05 PRIVATIZATION OF PTCL
5.1 Entrance of PTCL in a New World...........................................................21
5.2 Causes of Privatization............................................................................22
5.3 Impact of Privatization .............................................................................23
5.4 Porter’s Analysis......................................................................................32

CHAPTER NO.06 SWOT ANALYSIS
6.1 Strengths .................................................................................................36
6.2 Weaknesses............................................................................................36
6.3 Opportunities ...........................................................................................37
6.4 Threats ....................................................................................................37
CHAPTER NO.07 PERFORMANCE OF PTCL
7.1 Current Financial Position........................................................................39
7.2 Performance of Company from Financial Year 2005 to 2010..................39
CHAPTER NO.08 PROBLEMS AND PROSPECTS
8.1 Problems .................................................................................................47
8.2 Future Prospects .....................................................................................49
CHAPTER NO.09 QUESTIONNAIRES
9.1 Questionnaires Analysis..........................................................................52
CHAPTER NO.10 HYPOTHESIS TESTING
10.1 Hypothesis No.1 ....................................................................................66
10.2 Hypothesis No.2 ....................................................................................67
CHAPTER NO.11 RESEARCH FINDINGS
11.1 Findings from Questionnaires................................................................69
11.2 Findings from Interview..........................................................................70
CHAPTER NO.12 CONCLUSION AND RECOMMENDATIONS
12.1 Conclusion.............................................................................................73
12.2 Recommendations.................................................................................74
REFERENCES ...............................................................................................75
ANNEXURE ....................................................................................................76

Institute of Business & Technology 1
CHAPTER NO.01 INTRODUCTION
1.1 Introduction ............................................................................. 02
1.2 Purpose of Study .................................................................... 02
1.3 Research Objectives............................................................... 02
1.4 Research Methodology........................................................... 03

1.0 INTRODUCTION
1.1 Introduction
The topic “Causes & Remedies of Privatization of PTCL” covers the
historic growth of Pakistan Telecommunication Company Limited, its
privatization, causes and impacts that effect the performance of the company,
and the current position of the company. This is a descriptive report which
considers each aspect of the topic from beginning from the word privatization till
the issues and future prospects of telecommunication sector.
1.2 Purpose of Study
We will be going to study “Causes & Remedies of Privatization of PTCL”.
In general situation there are very little emphasis on studying the impacts of
privatization in terms of creating value. This project will provide in depth the
analysis of Pakistan Telecommunication Company Limited before and after
privatization. The main focus of the report is to:
1. Examine the condition for privatization.
2. Impacts of privatization on PTCL’s finance.
3. Is privatization adding value to PTCL?
4. Remedies for PTCL privatization.
1.3 Research Objectives
This study is significant for us as not much literature is available for
privatization of telecom sector particularly in Pakistan. The following would be our
research objectives:
1. Causes for privatization
2. Study causes involving for privatization
3. Privatization Strategies
4. National & International perspective
5. Remedies for privatization

1.4 Research Methodology
This research is based on both primary and secondary sources. The
primary data includes official reports, questionnaires, interviewing and
discussions with the customers, whereas the secondary data includes
magazines, newspapers, articles, internet, etc. The sampling method used in the
report is cluster (area) sampling. The selected areas for research are I.I.
Chundrigar Road, North Karachi, and Gulshan. The sample size is 30 persons.

CHAPTER NO.02 LITERATURE REVIEW
2.1 Literature Review.................................................................... 05

2.0 LITERATURE REVIEW
Telecommunication is one of the oldest sectors of Pakistan. In the starting,
it was related to telephone and telegraph. The department was further
established in 1991 into Pakistan Telecommunication Corporation (PTC) which
was the monopolist in the country. The people were compelled to use this service
as no other option was available. In 2003 the telecommunication sector was
developed and the gate for investment to the new investors in this sector made
open.
Over past three decades State Owned Enterprises (SOE) played growing
role in development of economy. The term SOEs refers where any government-
owned or controlled unit that produces and sells industrial, commercial, or
financial goods to the public. Gray Cowan categorized the SOE’s as following
(depends on the state) [1]:
 Enterprises wholly owned and operated by the state.
 Enterprises partially operated by government and partially by private
sector.
 Enterprise owned by the government but operated by outside
managers.
 Public services (local or national) such as railways, telecommunication,
national airlines, health and educational services.
The Privatization is generally referred to a total or partial sale of shares of
any government owned organization to the private investors. Privatization refers
to the transfer of any Federal property, right, interest, concession or management
to any person. Person in turn is broadly defined to include partnerships,
companies, and the like, other than those owned or controlled by Federal
Government. In legal terms, privatization “includes a transaction by virtue of
[1] www.questia.com “Privatization in the developing world”

which any person from the Federal Government or any enterprise owned or
controlled, wholly or partially, directly or indirectly, by Federal Government”.
Approximately all the authors focus on the positive impacts of
privatization. The technique is rather beneficial for the sake of country,
government, and people in situation depending upon the country to country and
its economy. The government can make some profit with the sale of its asset with
privatization, many subsidies of the government are also saved, challenging
environment will be developed with the entrance of new companies, etc. Savas
has described four major reasons that are convincing privatization across the
country [2]. They include:
Pragmatic – where people define a need for government to improve
services.
Ideological – where there is a desire for less government.
Commercial – where private sector observes opportunity for profit
by performing government services.
Populist – where people justify privatization in the name of a better
society.
William L. Meginson and Jaffry M. Netter said: “Privatization is one of the
most important elements of the continuing global phenomenon of the increasing
use of markets to allocate resources” [3]. Privatization would be more successful
depending on the degree of market failure. Son in some cases the privatization
would be the only option to make the organization competitive in the market. The
ability of contracting by a Private Sector is much better than the Government
Sector. The goals of the Government Sector are inconsistent because it would
only have to focus on wealth-maximizing. The goals are changed from one
administration to another and this inability to commit a policy will definitely reduce
the efficiency of the organization.
[2] http://government.cce.cornell.edu/doc/summary.asp?id=savas1987
[3] http://www.scribd.com/doc/14170880/Privatization-study

Jomo K. S. and Tan Wooi Syn suggest that privatization would help in
reducing poverty and inter-ethnic disparities, and the privatization would be a
positive step towards the sake of the country, as privatization concentrates on
welfare of the country’s people with maximizing the share-holder wealth [4].
[4] http://www.jomoks.org/research/pdf/IPD_Privatization_Renationalization.pdf

CHAPTER NO.03 PAKISTAN TELECOMMUNICATION
COMPANY LIMITED (PTCL)
3.1 Introduction to PTCL............................................................... 09
3.2 Growth..................................................................................... 09
3.3 Core Values ............................................................................ 11
3.4 Mission.................................................................................... 12
3.5 Vision ...................................................................................... 12
3.6 Services & Products................................................................ 13

3.0 PAKISTAN TELECOMMUNICATION COMPANY LIMITED
(PTCL)
3.1 Introduction to PTCL
Pakistan Telecommunication Company Limited, PTCL is a giant portion
and an integral part of the telecommunication industry of Pakistan. It is now
running by a privately owned Dubai company known as “Elisalat” (Emirates
Telecommunication Corporation). Etisalat, itself is one of the huge companies
who have spread their roots almost all around the world. PTCL is the sole
provider of landline service all over the country. Now it has moved for focusing
towards digital technology of telecommunication, so that the remote areas which
are still lacking with the service of telecommunication can also be catered.
3.2 Growth
At the time of development of Pakistan “Pakistan Post & Telegraph
Department” was established. As the time passed the technologies developed,
and in 1962 “Telegraph & Telephone Department” was made which was
separated from “Pakistan Post”. In 1991, “Telegraph & Telephone Department”
was further modified and converted into Telecommunication Corporation under
the Pakistan Telecommunication Ordinance 1991.
This ordinance opened the doors of entrance to the competitors and
started awarding the licenses to the private cellular companies and card phones.
Government of Pakistan gave much relaxation to the new competitors, but still
PTC (Pakistan Telecommunication Corporation) was the only monopolist in this
market of the land line services. In 2003, the monopoly of PTC was come to an
end as the government decided to privatize it, the decision made the total
liberalization to the telecommunication sector [5].
In 2006, Pakistan Telecommunication Corporation (PTC) was completely
privatized and 26% management shares were sold to “Emirates –
[5] mahameed.blogspot.com/2005_04_01_archive.html

Telecommunication Corporation” (Etisalat) [6]. Now the PTC was converted into
PTCL (Pakistan Telecommunication Company Limited). The decision was taken
for advancement and change for a better growth, progress and adaptation
towards a challenging world for the sake of the company. As the pace of
technology is changing, the networks of future will only be digital and smarter
with a high transmission capacity and flexible bandwidth. In future the services
provided will be personal and tailored to individual needs.
Etilisat embraces new technologies and make the world of global
communications accessible to more people. It perfects the art of bringing people
together. To reflect growth, the firm’s insight for the future and concern for
people, it now has a new corporate logo identity. The identity has green
background that signifies solidness, inspires confidence and denotes Elisalat, the
mother brand. The green dot represents technology the world of communication.
The three curved design of logo not only represent the letter “E” which stands for
“Etisalat” or “Emirates”, but also signifies as an entity that is growing outside its
boundaries and expanding into strategic businesses, locally and internationally.
PTCL is proud to be Pakistan’s most reliable and largest converged
services carrier providing all telecommunication services from basic voice
telephony to data, internet, video-conferencing and carrier services to consumers
and businesses all over the country. Whether it is an office in the largest city of
Pakistan or a home in small village, PTCL is present in every corner of Pakistan
to serve their customers.
PTCL is all set to redefine the established boundaries of the
telecommunication market and is shifting the productivity frontier to new heights.
Today, for millions of people, we demand instant access to new products and
ideas. More important, we want them for their better living standards with
increased values in this ever-shrinking globe. We are setting free the spirit of
innovation. PTCL is going to be your first choice in the future as well; just it has
been over the past six decades.
[6] propakistani.pk/.../sale-ptcl-26-percent-shares-what-actually-happened/

3.3 Core Values:
Professional Integrity
Customer Satisfaction
Team work
Company Loyalty
Energy
We value and nurture energy and dynamism need to achieve the very
best in the business. We look forward to future challenges and opportunities.
Openness
As a company, we are welcoming, sociable and friendly to customers,
suppliers and employees. We deal with people in a clear, direct way and are
always honest and fair in business dealings.
Enablement is our aim through which we open up the opportunities and
actively help people in achieving their goals. We always deliver what we say.
Future: A world in which technology extends our reach
Already books, music, and services don’t have to be in physical form to be
sold online. Advance networks will increasingly provide education, health care
and other goods and services. For instance, a telemedicine already allows
patient to seek the best advice from doctors around the world, now robotic aids
are beginning to make a remote surgery possible. As the pace of technological
change increases, Etisalat will extend its reach into technologies, markets and
services to create opportunities for the customers.
International investment of Etisalat
Free Libyana – Libya
Mobily – Saudi Arab
PTCL – Pakistan
Etisalat – Egypt

Canar – Sudan
EMTS – Nigeria
Zantel – Tanzania
Atlantique Telecom/Moov – West Africa
XL Axiata – Indonesia
Etisalat – Afghanistan
Millicom International Cellular – Srilanka
Etisalat DB Telecom India Pvt. Ltd. – India
Elisalat – UAE (Abu Dhabi, Dubai & Northern Emirates) [7]
3.4 Mission
PTCL’s mission contains following criteria:
An organizational environment that fosters professionalism, motivation
and quality.
An environment that is cost effective and quality conscious.
Services that are based on the most optimum technology.
"Quality" and "Time" conscious customer service.
Sustained growth in earnings and profitability.
3.5 Vision
To be the leading Information and Communication Technology Service
Provider in the region by achieving customer satisfaction and maximizing
shareholders' value’. The future is unfolding around us. In times to come, we
will be the link that allows global communication. We are striving towards
mobilizing the world for the future. By becoming partners in innovation, we are
ready to shape a future that offers telecom services that bring us closer. [8]
[7] http://en.wikipedia.org/wiki/Emirates_Telecommunications_Corporation
[8] http://www.ptcl.com.pk/pd_content.php?pd_id=39

3.6 Products & Services
The chief services that are offered by PTCL in the following areas:
1. Home & Personal
2. Business
3. Carrier & Wholesale
4. International Business
1. Home & Personal [9]
a. Landline: PTCL has the largest copper based infrastructure spread all
over Pakistan. The most economical rates can be found on PTCL.
b. EVO 3G wireless broadband: EVO is wireless broadband service of
PTCL it’s a USB device and can be connected from anywhere in the
country. It has certain different packages including EVO-DO Nitro
9.3Mbps, EVO Wi-Fi Cloud, etc.
c. Broadband: PTCL broadband is the largest and the fastest growing
service in Pakistan and it becomes the first operator in the world for using
VDSL2 bonding technology.
d. Smart TV: Pakistan is in the list of some of the countries of the world that
uses this service. One can easily “Rewind, Pause and Play” the chosen
program.
e. Vfone: PTCL has the largest network of WLL (Wireless Local Loop) all
over the country, it’s a CDMA based technology and economical with the
freedom of your movement within your premises.
f. Dialup: The free internet facility is now activated in all the phones of PTCL
which is as low as Rs.6 per hour.
[9] http://www.ptcl.com.pk/page_category.php?pd_id=9

2. Business [10]
a. Business Connectivity: The businesses could be connected via
SKYLINK Satellite service, 3G connect – a wireless modem connection
like EVO, DSL, SHDSL, business VPN, DXX, ISDN, etc. services.
b. Business Communication: PTCL provides the services of audio
conferencing, video conferencing, personnel collaborating in which up to
10 users can interact, UAN (Universal Access Number), Toll free number
and EVO 3G broadband that facilitates your business to run smoothly.
c. Managed Services: The new innovated service by PTCL is
“Telepresence”. The corporate clients can rent a PTCL room for hours and
can do their business communication with clear voice and a high definition
video that delivers a true “in – person” experience. It is designed to build
businesses and to bring people closer. The creation of live, face to face
meeting experience enables people to interact and collaborate like never
before.
d. Hosted Solutions: Web hosting and unified communications are the
special cost effective services for its corporate clients. The time saving
and easy collaborations are possible for corporate customers and SME’s.
e. Business Security: PTCL i-Sentry offers the security systems for the
corporate and private businesses. In this era, the use of security cameras
becomes the need for continuation of any business. PTCL not only
provides the video monitoring but its online storage that can be viewed
from PC’s/mobile anytime and anywhere.

3. Carrier & Wholesale [11]
a. Wholesale Services: PTCL offers the services of Calling Card & LDI,
Payphones and Broadband services to private customers whoever wants
to start their business with PTCL. They will be supported wherever the
PTCL network is spread.
b. Telecom Operators: For the telecom operators, PTCL provides the
service of METROWay® solutions with a dark metro fiber cable for
cellular, wireless local loop and local loop connectivity. It is deployed all
over the country. PTCL also offers tower sharing, inter-connection for
traffic exchange, power, co-location and other managed services. It also
offers high wavelength service with LightWAVE® which provides up to
10Gbps capacity per wavelength which can be used in bandwidth hungry
telecom operations.
4. International Business [12]
a. Data Products & Services: PTCL offers three services for its
international customers. This includes IPLC (International Privately
Leased Circuits) which is the privately owned secured global networks that
work on digital connections all around the world, IVPN (International
Virtual Private Networks) which allows the companies to connect and
transfer data over a secured, private and reliable network infrastructure all
around the world. It covers more than 67 countries of the world, and
Satellite and Radio Solutions which is another attractive service of two
way communications anywhere within satellite footprint. It provides point
to point connectivity via satellite from one customer to another.
b. Transmission Network:
It is the largest cross border and the most extensive submarine based
network. The total network is divided into three parts.

1. SEA-ME-WE-3: South Asia – Middle East & Western Europe (SEA-ME-WE)
is the longest system in the world which covers 39,000 km, 33 countries
and 4 continents from Western Europe (including England, Germany and
France) to Far East (including China, Japan and Singapore) to Australia.
2. SEA-ME-WE-4: This network is spread over 20,000 km, and links 14
countries with 16 landing stations across Europe, Middle East and Asia
plus extension links in various countries.
3. I-ME-WE: India – Middle East & Western Europe, I-ME-WE, is a high
speed fiber optic cable network which starts from India in Asia, to Italy and
France in Europe via Middle East with 9 landing stations in 8 countries
and spreads over 12,000 km.

CHAPTER NO.04 PRIVATIZATION
4.1 Introduction ............................................................................. 18
4.2 Types of Privatization ............................................................. 18
4.3 Privatizations in Pakistan........................................................ 19

4.0 PRIVATIZATION
4.1 Privatization
Privatization is the total or partial sale of any government owned entity to
the private investors or businesses. The process of privatization leads to the
reduction of government sector and increase in the ownership of assets by
private sector. Any transfer of assets or shares of any state owned business to a
private business is also termed as privatization.
4.2 Types of Privatization
Mainly there are three types of privatization. [13] They include:
Assets Sales Privatization
Share – Issue Privatization
Voucher Privatization
Asset Sales: In Asset Sales privatization the government sold out the enterprises
to existing private firm or to a group of investors. It depends upon the
government to sell its share in fraction or in whole in Asset Sales privatization,
the traditional method of such privatization is auction, but government may
sometimes sold out its enterprises directly to the investors.
Share-issue privatizations: The Share-issue privatization (SIPs), is the one in
which the government sells equity shares in the public capital market which open
to retailer and investor. This method is the most significant method of
privatization in terms of size and also one of the most economical ways of
privatization (Megginson, et al., 2004).
Voucher privatizations: The Voucher privatization is similar to SIPs Privatization,
in such privatization the share are open to the masses, these Voucher normally
free or very low cost and are open to all masses, in other words we may say that
[13] http://wiki.answers.com/Q/What_is_the_types_of_privatization

it is another kind of SIPs offered at low price (Megginson, et al., 2004).
4.3 Privatization in Pakistan
During past few years Pakistan had seen an increase in privatization in
the traditional state functions. There are a great number of private companies
providing different services approximately in all sectors of the country’s economy.
This includes private schools and educational systems, private armed guards,
private toll roads, private hospitals, etc. Instead of improving its service the
government always selects an easy option of privatizing the company.
According to the recent data from “Privatization Commission of Pakistan”,
there are 22 privatization cases completed from the year January 2005 till June
2010 [14]. This includes many sectors of the country in which PTCL is one which
is acquired by Etisalat.
[14] http://www.privatisation.gov.pk/about/Completed%20Transactions%20(new).htm

CHAPTER NO.05 PRIVATIZATION OF PTCL
5.1 Entrance of PTCL in a New World.......................................... 21
5.2 Causes of Privatization ........................................................... 22
5.3 Impact of Privatization ............................................................ 23
5.4 Porter’s Analysis ..................................................................... 32

5.0 PRIVATIZATION OF PTCL
5.1 PTCL’s Entrance in the New World
After the development of PTC (Pakistan Telecommunication Corporation)
in 1991, Pakistan’s Government shows its intention to privatize it. The option of
privatization was selected to meet the needs of the people and to cope up with
the environmental change on the economy. A consortium was hired for this
purpose to check-out the feasibility, and on the basis of this feasibility report the
Government of Pakistan decided to sold-out 26% of the management share to a
private company known as “Etisalat”. The name of PTC (Pakistan
Telecommunication Corporation) was changed to PTCL (Pakistan
Telecommunication Company Limited).
The process of privatization was occurred in different phases. As decided
in the “Privatization Session 1991-1992” 12% management shares were
transferred in 1994. In August 1994, one million exchangeable vouchers were
issued which has are equivalent to 100 million shares, in September 1994, five
million vouchers had been issued to thirty one international investors. The values
of all the issues were $900 million international and Rs.3 billion domestic while
the values of vouchers in first and second issue were Rs.3,000 and Rs.5,500
respectively. The matter of selling of 26% management share of PTC was still
unsolved. The mission of the Government was ongoing, and issues notes of
US$150 million to international investors in 1997.
The notes issued were convertible to fully paid, “A – Class” ordinary
shares of PTC, and these were 3.3% of the total share capital issued [15]. In
August 1997 Government of Pakistan obtained US$250 million, and foreign
receivables were securitized successfully. A financial advisor was hired by
Privatization Commission for solving the matter and implementation on the
strategic sale of 26% management shares of PTC in 1995 but unfortunately he
was terminated from his service by the new government and in 1998, M/s
Goldman Sash International was hired to provide the financial advisory services
[15] http://www.privatisation.gov.pk/about/Completed%20Transactions%20%28new%29.htm

on PTC privatization. The new financial advisor started working in the PTC head
office where all information was accessible regarding privatization.
Government approved the proposed policy of M/s Goldman Sash, and
decided to complete the re-regulation policy in the end of December 2003, major
steps were taken on legal and regulatory measures, PTA granted license to
PTML (Ufone) and proposed DSI regulation for tariff and licensing had also been
accepted.
At last in April 2006, the control of the Pakistan Telecommunication
Corporation was handed over to Etisalat (UAE based company). Etisalat assume
the control of the company by paying US$2.6 billions and purchased 26% shares
with the management control of the company. With the control of PTC, Etisalat
also assume the control of Ufone, one of the top class mobile service providers
and a subsidiary of PTCL [16].
This privatization brought a great technological change and innovation in
world of telecommunication, as we can now easily connect to the internet with
using our cell phones from any where in the country. TV coverage, MMS and
GPRS are the services available on all mobile services. PTCL also signed a
contact with Emaar Pakistan to provide information and telecommunication
services to household in Karachi and Islamabad. With this agreement PTCL is
the only services provider of the two big projects of Emaar Pakistan, every
household and office will be connect with fiber optic cable.
5.2 Causes of Privatization
1. The Telecommunication ordinance 1991, given more relaxation to the new
competitors in the market, PTCL would have to be developed with their
status.
2. Future networks will be digital the technology of wire will be vanished,
whereas this giant organization does all the work on landline phones, so to
convert this, the best thing even better than launching some technology
[16] http://telecompk.net/2007/09/04/ptcl%E2%80%99s-privatization-the-biggest-financial-scam-in-
pakistan%E2%80%99s-history/

itself government decided to sold the company to a private organization
which already working on digital technology.
3. The organization contains more than 50% under – graduate employees
and many other employees are unskilled and unprofessional. The
competition requires the competitive, qualified and dexterous labor, so to
convert this in a case of government organization privatization is the only
option. Otherwise, the labor will go on strikes or protest against the
government decision which will decrease the performance of the
company.
4. May be even having the largest market share and the most profitable
government organization, the profit couldn’t able to come up with its
accurate picture, as there could be the influence of illegal money for the
same work. PTCL was termed a giant as it is the oldest organization and
people are trapped to use this technology as so other substitute was
available.
5. Each year government announces certain budget amount for each of its
owned entity, the more entities owned by state, the huger budget will be
made and if there is already a limited amount reserved for budget
allocation so the entities would get the same. Whereas a privately owned
entity would face some market competition and has to modify itself
according to customers for surviving in the market. This looks like that
privatizing any firm will also reduce the budget allocation cost of that
department if it is done with accuracy, openly and with true facts and
figures.
5.3 Impact of Privatization
The major changes that occurred after the process of privatization were:
1. Impact on competition.
2. Impact on employment.
3. Impact on performance.

1. Impact on Competition: The leniency given by the Pakistan
Telecommunication Ordinance 1991 to the competitors aroused and Paktel and
Instaphone started their services. In 1994, Moblink joined this competition. In
2001, Ufone, a supplementary part of PTCL entered in the market and in 2005
both Telenor and Warid attached with the family of cellular phones. From the
year 2000 a great increase in the cell phones users is shown. Now approximately
73% of the overall population of Pakistan is using the services of cell phones.
Zong, previously known as Paktel has also captured a great market share.
According to the recent data of PTA, Telenor jumped to second position and
Warid is also increasing its popularity with capturing a huge market share
through a high pace as compare to other rivals. Just in the life time of four year
Telenor has reached the second position, after Mobilink, with the subscribers
around 19 millions.
2. Impact on Employment: Before privatization PTCL surrounded approximately
by 65,000 employees in its family. This included many unprofessional and
unskilled workforce, around 50% of the employees was under-graduate. The new
management of Etisalat analyzed that the PTCL team should be qualified,
competitive and able to meet the environment challenges. To overcoming the
operational costs PTCL examine the huge amount spending on the salaries and
other remunerations of the employees and started laying – off the unskilled
labour, this method would definitely reduce the operational costs. The process
was made smoothly flowed with the introduction of VSS (Voluntarily Separated
Scheme). Under this scheme, PTCL had to pay a lump sum amount to the
employees who want to leave PTCL. A huge cost incurred with the usage of this
scheme around Rs.34.94 billions for the year ended 2008 – 2009, it was
assumed that 60% of the workforce availed this package [17].
The PTCL HR department moved forward to continue the progression of
creating new corporate culture by providing equal employment opportunity.
[17] http://www.forumpakistan.com/ptcl-privatization-t5256.html#ixzz1Jr30KOgI

This technique reduced the number of unskilled employees and the fresh
professionals were hired from the market. HR department also organized
different trainings and development programs for new candidates that appointed.
A comprehensive six months training program was designed in technical and
managerial fields to enhance their soft skills, this was known as Urgent Training
Needs Programs. The whole recruitment process was redesigned to cope up
with the environment changes, for this strong improvements were made in the
areas of recruitment and retention. Simultaneously the detailed orientation
programs were established for the new hired employees so that they could be
familiar with the culture of the organization quickly. The new doors for the
competent employees of PTCL were made open as Etisalat has its roots in many
other countries of the world.
Privatization helps in restructuring, developing and modifying the
organization and also its culture. The new generation could get chances of
opportunities in many different areas of a company where at a time joining is a
great task. Many privately owned organizations are following the rule of “Equal
Employment Opportunity – EEO” in which each employee would get equal
chance of selection. This procedure has finished the concept of “Quota System”
from organization and only cream of professionals will be selected for vacant
positions [18].
Training & Development:The role of training and development becomes more
complicated with a service concerned organization as compare to manufacturing
concerned. The role becomes more important in a situation where the need to
transform organizational culture is identified as a most clear problem and the
most difficult hurdle towards organizational growth. The employees are a great
asset not only for the company but also for the country.
Training and Development section is playing an important role in changing
the PTCL from a government organization to a corporate business. For this they
never miss any chance to contribute towards the betterment of the company.
[18] www.ptcl.com.pk

PTCL consider each employee as its customer and to make their needs fulfilled
is just like the customer satisfaction for PTCL. The clear roads maps of training
and development are established which are committed to provide high quality
trainings for the growth of each single employee.
3. Impact on Performance: The government organization which has impact of
political aspects is very hard to be motivated for improving its performance. The
only option left to the state is its privatization. The new management would now
be sensitive for improving its functions and motivation of employees which can
lead the performance improvement of the company.
a. Liquidity Ratio: Liquidity refers to the solvency of the firm’s overall financial
position, it is the ability to satisfy the firm’s short – term obligations. The liquidity
ratios can provide a very early signs of cash flow problems and implementing
business failures. There are two kinds of liquidity ratios; the one is called “Current
Ratio” and the other is called “Quick Ratio”.
The firm is considered to be more liquid if have the higher current ratio.
The following table summarizes the liquidity position of PTCL before and after
privatization.
Table 4.3.1 Liquidity Ratio comparison (Annexure – 1 & Annexure – 4)
Years Current Ratio (in times) Quick Ratio (in times)
2010 1.51 1.37
2009 1.50 1.36
2008 1.81 1.56
2007 2.19 2.06
2006 1.66 1.54
2005 1.89 1.73
2004 2.78 2.67

Figure 4.3.1
Liquidity Ratios
0
0.5
1
1.5
2
2.5
3
2004 2005 2006 2007 2008 2009 2010
Years
Times
Current Ratio (in times)
Quick Ratio (in times)
Source: PTCL website (www.ptcl.com.pk)
Interpretation: The figures show that the firm has more liquid position before
privatization, the firm was privatized in 2006 and it can be said that the liquidity of
the firm has decreased after privatization.
b. Leverage Ratios: The leverage ratios are used to measure a firm’s ability to
meet its long term financial obligations or to get an idea of firm’s methods of
financing, as it uses the combination of assets, debt, equity and interest
payments. Leverage Ratios measure the degree of protection to suppliers with
long term funds. The level of financial leverage of the firm depends on many
factors which include availability of collateral, strength of operating cash flows
and tax treatments.

Table 4.3.2 Debt-Equity and TIE Ratio comparison (Annexure – 4)
Years Debt : Equity Times Interest Earned
2010 17 : 83 36.42
2009 16 : 84 16.43
2008 15 : 85 (4.26)
2007 14 : 86 47.54
2006 14 : 86 93.07
2005 13 : 87 87.35
2004 13 : 87 64.34
Figure 4.3.2
Times Interest Earned
(20.00)
0.00
20.00
40.00
60.00
80.00
100.00
2004 2005 2006 2007 2008 2009 2010
Years
Times
TIE Ratio
Interpretation: The figures show that after privatization PTCL uses more
aggressive financing for its operations, and its debt continuously increasing
which made owner’s investment more insecure.
In the case of times interest earned ratio, the PTCL position before
privatization was getting more better but after privatization it shows not only
declining position but negative also in the year 2008 with an unfavorable result of
(5.26) Times.

c. Profitability Ratio: The investors evaluate the profitability of the firm with
respect to given level of sales, a certain level of assets or the owner’s
investment. A non – profitable firm is not attracted by the investors and hence it
could not be able to influence the outside capital for investment. As the profit is
more seriously considered by the management, owners, and creditors of the
business so a great importance is placed on company’s earning in the market
place.
Table 4.3.3 Comparison of PTCL’s Profit (Annexure – 4)
Year EBIT Margin Net Margin Return on
Equity
Earnings Per
Share
% % % Rs.
2010 25.68 16.26 9.33 1.82
2009 25.20 15.45 9.28 1.79
2008 (5.45) (4.26) (2.71) (0.55)
2007 34.13 22.01 14.45 3.07
2006 39.43 26.16 20.22 4.07
2005 45.50 30.46 25.45 5.22
2004 53.94 35.73 28.20 5.72

Figure 4.3.3
Comparison of Profitability
(10.00)
-
10.00
20.00
30.00
40.00
50.00
60.00
2004 2005 2006 2007 2008 2009 2010
Years
%
Operating Profit Margin
Net Margin
Return on Equity
Interpretation: The above graphs and the data in the table show that operating
profit margin, net margin, and return on equity of PTCL was better before
privatization. The privatization affected the “Net Margin” and “Return on Equity”
more badly than “Operating Profit Margin” of the company. A continuous
declining shape of the operating profit with a negative figure in net margin and
return on equity can be seen clearly.

Figure 4.3.4
Earnings Per Share
(1.00)
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2004 2005 2006 2007 2008 2009 2010
Years
Rs.
Earnings Per Share
Interpretation: The figure above is demonstrating a negative effect of privatization
of PTCL as the company couldn’t able to maintain its earnings per share. This
type of situation represents a very negative picture of the company to investors,
and they are more concerned about the future options available to the company.
Another explanation of above figures (4.3.3 & 4.3.4) show a good point of
privatization as the company got its recoveries very early and quite properly. The
negative figures of “Net Margin”, “Return on Equity” and “Earnings per Share” in
the year 2008 were now turned back in a better position with average figures.
The impact of introducing VSS in PTCL had left it’s affect on the three mentioned
ratios. Nevertheless the VSS was very costly but the opportunities for new
generation opened and just in a year the hardworking of the new employees had
turned the negative image into a positive one. It will not be wrong if said that the
new management of PTCL achieved positive points in these ratios even facing
an era of continuous increase in competition in the market.

5.4 PTCL in Porter’s Analysis
Following are the analysis of PTCL in Porter’s Five Forces Model given in
management. These forces include:
1. Rivalry among the firms.
2. Threat of new entrants.
3. Threat of substitute.
4. Bargaining power of suppliers.
5. Bargaining power of customers.
1. Rivalry among the firms: The competition was more grown when Telenor and
Warid joined the family of telecommunication in the year 2005. The limited
validity of outgoing call balance was converted into lifetime validity. The limit of at
– least balance loading in pre – paid connections was also dissolved with the
entrance of Telenor in the developing economy like Pakistan. A great competition
in low pricing was started and on the other hand the cost and the budget of
advertising and sales were raised to face the market competition.
The competition was divided into three parts; wired line, local wireless
loop and cellular technology. PTCL is the only provider of wired line. In local
wireless loop PTCL (V – fone) also spread some roots but as it was too late to
introduce the services among the competitors like Wateen, World Call, Tele
Card, etc. As far as cellular technology is concerned Mobilink was and still
leading where as Ufone stood on second. Ufone (a PTCL subsidiary) has now
lost its second position and Telenor took it. The introduction of the cellular
technology was a great threat for the fixed line, as it is the convenient, personal
and economical facility for the customers that functions same “make any call or
pick any call” with a latest innovation of “Text Messaging”, which cost more lower
than a call. In this complex situation the firms with the best technology and
superior customer service will only survive.
2. Threat of new entrants: Day by day the telecommunication firms are
introducing new deals and discounts which the competitor has to follow to remain

with the same market share. The competition is growing relentlessly and today,
the five companies Mobilink, Telenor, Ufone, Warid, and Zong have reached their
maturity level. While in fixed land line PTCL remains the leader all over the
country. The network of any other company is not an easy task to be developed
like PTCL. In wireless local loop the giant competitors including PTCL (V – fone)
are enjoying their maturity level but some other competitors in this sector are
struggling for their survival in the market. So the threat of the entrance of new
competitors capturing the market share is very low.
3. Threat of substitute: The cellular technology is developing in the country
constantly. As we have seen in the past years that many cellular companies shut
down or merged as they were unable to survive in the complex competition.
“PakTel” was acquired by CM Pak Ltd. (China Mobile Company) and afterwards
it has again acquired by “Zong”. Many users of PTCL converted to other
networks and many have them just left for cellular phones. People feel more
convenient in cellular phones as new services of them which include voice chat,
text messages, MMS, emailing, etc.
DSL internet is the substitute of all the three lines; wired, WLL and cellular
phones. As now a day, internet has become the cheapest source of
communication and most of the official communications are done with internet.
PTCL has an advantage that it provides services in both; dialup and DSL
Broadband. The most important thing is that the infrastructure of PTCL for these
services is already available all over in Pakistan, so for substitute competitors
PTCL would cover with landline, if facing any trouble in its DSL service.
4. Bargaining power of suppliers: In the telecommunication industry there are no
suppliers, hence all the competitors are free from one side as there is no
bargaining power of suppliers. Any service if required in telecommunication
industry so PTA (Pakistan Telecommunication Authority) sets some criteria for all
the telecom operator companies. PTCL is providing some services to operate
especially in wireless local loop, so for PTCL there is no such threat.

5. Bargaining power of customers: More customers are more conscious about
cost incurred on the calls; they usually don’t want additional services of video
conferencing and internet from their connection. These value–added services are
restricted with a particular segment and from here a tough bargaining power of
buyers in the market aroused. The people are more alert in using the different
packages provided by the different cellular networks, so the use of having more
than one connection is commonly found. If one connection package giving free
calls from mid-night to morning so the second one is giving this facility in the
daytime or others could be offering a lower call rates.
All these benefits are gone in the benefit of customers and therefore there
is a huge interest of skipping to other networks is found. PTCL landline is also
providing a strong package with free local on-net calls after mid-night while Ufone
is also providing one of the best services of cellular networks.

CHAPTER NO.06 SWOT ANALYSIS
6.1 Strengths .............................................................................. 36
6.2 Weaknesses ......................................................................... 36
6.3 Opportunities ........................................................................ 37
6.4 Threats.................................................................................. 37

6.0 SWOT ANALYSIS
6.1 Strengths
 Largest operational network and infrastructure within ICT (Information &
Communication Technologies) segment.
 Market leadership in Local loop, Wireless local loop (WLL) and fixed
telephony.
 Competitors still depend on PTCL network either directly or indirectly.
 About 2000 exchanges all around the country and leader for landline
network.
 Internet facility on basic telephone line and both Dialup and DSL.
 "Ufone", PTCL subsidiary for mobile communication, is the country's third
largest mobile phone operator with 21.5% market share, and about 20
million subscribers.
 Ufone has the top class technology and services in mobile telecom sector;
it is continue expanding its coverage and customer base and as one of the
leading services provider in Pakistani cellular market.
 PTCL offer "digital interactive television" services with the highest digital
quality picture. More than hundred TV channels are offer in big cities like
Lahore, Karachi and Rawalpindi and Islamabad by PTCL Smart TV.
6.2 Weaknesses
 Not been able to nurture its growth around customer services oriented
strategy.
 Internal organizational and business processes issues.
 Monopolistic culture has further added to its complexities.
 PTCL-V, the fixed wireless phone service is poor.
 Over employment & low productivity.
 Slow decision making including external interferences.
 PTCL has a continuous downward trend in its revenue since 2005.
 Slow pace in adopting the latest technology.

 Telephonic complaint will rarely complete, customer need to go physically
to the offices for making complaints.
 PTCL has no Research and Development.
6.3 Opportunities
 Have vast infrastructure and real estate assets which can be leveraged
further.
 Global connectivity reliability has been improved. PTCL is expanding the
long distance and infrastructure side through spreading out two sea-me-
we submarine cables.
 Large unmet market with total population of 150million.
 PTCL has the opportunity to utilize its sources namely submarine cable
system and satellite communication system for low cost long distance
communication.
 There is no strong competition in the landline market.
6.4 Threats
 Increased competition in long distance continues to exert pressure.
 Migrations of the users over cellular networks.
 Reduction in International Settlement Rates.
 There is continues price war between telecom operators in the market.

CHAPTER NO.07 PERFORMANCE OF PTCL
7.1 Current Financial Position....................................................... 39
7.2 Performance of the Company from Financial Year 2005 to
Financial Year 2010................................................................ 39

7.0 PERFORMANCE OF PTCL
7.1 Current Financial Position
The management of PTCL had come in criticism for its relatively slow
response towards the rapidly changing world of technology. But if we compare
today’s PTCL with the company in the year 90’s so we could find a great change
and development in the company. Its accounting systems are converted from
single entry to double entry; the balance sheet is now a clean which was multi –
qualified; implementation of comprehensive tariff re-balancing; the lead time for a
connection was reduced from 90 days time period to 24 hours, etc. These are
extremely positive developments with a major impact of the operating efficiency
of the company.
Table 7.1.1 PTCL’s Current Financial Position
Company Name: Pakistan Telecommunication Company Limited
Industry: Telecommunication
Market Value Per Share: PKR. 17.80 (as on June 30, 2010)
Earnings Per Share: RKR. 1.82
Total Assets: PKR. 150,768 million (as at June 30, 2010)
Shareholders’ Equity: PKR. 99,759 million (as at June 30, 2010)
7.2 Performance of the company from Financial Year 2005 to 2010
(Annexure – 1, Annexure – 2, Annexure – 3, & Annexure – 4)
The revenue of PTCL for the “Financial Year Ended June, 30th
2010” was
57,174 million which is decreased by 3.484% as compare with the previous
financial year. This was due to uncertain economic condition and the interference
of competitors; their gigantic advertisement; the new strategies, etc. Due to
increase in selling and marketing expenses PTCL’s operating profit was

decreased by 2.2% yet increasing its other operating income by 16.89% in the
Financial Year Ended June, 30th
2010.
The “Total Assets Turnover” of PTCL also showing a decreasing
trend from past years. The reason of this ratio is due to the decrease in revenues
of the company. The total assets are increased with a good ratio but
simultaneously PTCL couldn’t be able to maintain its revenue.
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Rs.inMillions
2005 2006 2007 2008 2009 2010
Years
PTCL's Revenue & Total Assets
Revenue
Total
Assets
The profit in the Financial Year 2007 went to 71,068 million which was
standing at 79,411 in the Financial Year 2006. It was because of some structural
adjustments brought by the telecom sector due to increasing competition and
increasing of cellular phones expansion. The revenues of Financial Year 2009
stood at 59,239 million which were 10.6% lower than the previous financial year.
This was because of the increasing rate of decline in fixed telephony due to price
competition, higher taxation and mobile substitution. The decline was mainly in
the domestic users of PTCL.

PTCL is still the leader of Land Line (LL) and Wireless Local Loop (WLL).
It has lost 2% market share and now having 74% which was 76% in 2009. The
remaining 26% market share is distributed among other companies. PTA has
been declared PTCL as Significant Market Power (SMP) operator in Pakistan;
however the quality service issue persists.
Source: Pakistan Telecom PTA Annual Report 2009 - 2010
In “Financial Year 2009” PTCL faced two challenges; price attrition and
escalating costs. These were increased for the survival in the telecom industry as
the competition was increased and customers started shifting towards their
preferences networks. PTCL did not only provide more value to its customers by
the introduction of unified tariff but also introduced new services especially
focusing on the areas of Broadband and Corporate services for maintaining its
customers which can enhance its revenue.
We would find a certain decline in the most of the important figures to
investors. A negative value also arrived in some of the ratios like net margin,

return on equity, price – earning ratio, etc. The negative figures can be found in
the Financial Year 2008 which was proved that the company born a loss. This
was due to some organizational measures taken by the company which includes
the introduction and implementation of VSS and ERP packages, and different
innovative services. The revenue was decreased by 6.65% from Financial Year
2007 to 2008. The effect of VSS was continued till the Financial Year 2009.
The decline in the profits of the company due to above cited reasons has
leaded to decrease in the “Gross Margin” also. The gross margin of the company
declined to 18.15% in 2009 which was 24.67% in 2008 and 26.33% in 2007. The
causes of decline in profits are due to increasing in selling cost, marketing and
selling expenses. This is attributable to the introduction of new services and
packages and launching of campaigns for increasing the awareness of PTCL’s
broadband and multimedia. Similarly, the company’s net margin also declined
from 30.46% in Financial Year 2005 to 16.26% in Financial Year 2010, which
influenced the return on assets and return of equity in the same negative
manner.
Comparison of Profitability
-10
0
10
20
30
40
50
60
2004 2005 2006 2007 2008 2009 2010
Years
%
Gross Margin
NetMargin
EBIT Margin

Vigorous efforts were taken for retrieving the company debtors and a
decrease in general and admin expenses were seen, they arrived at 7.22 billion
in Financial Year 2010 which were 8.93 billion in 2009 and 10.82 billion in
Financial Year 2008. Also the net margin of PTCL had shown a declining effect
since past five year’s period. It was 30.46% in the Financial Year 2005 and stood
at 16.26% till the Financial Year 2010.
The increase in long term investments and long term loans are found, it is
due to the advance for the issuance of ordinary shares and loan under a
subordinated debt agreement were given to Pakistan Telecommunication Mobile
Limited (Ufone), a subsidiary of PTCL. The change in liabilities was brought due
to the decline in current liabilities of the company. Even the rise in current assets
was found but actually it was the reason of increasing debt. In 2008, the
company’s debt to asset ratio was 30% which jumped to 35% in 2009. The
liabilities were also influenced with the increase in deferred government grants
received from Universal Service Fund which were mainly related to property,
plant and equipment received as assistance towards the development of
infrastructure in rural areas and include telecom infrastructure project for:
Basic telecom services in Pashin, Manshera, Dadu and Larkana
Optical fiber extension – Balochistan Package – 2
Broadband projects in Faisalabad, Sarghoda, Multan, Bhawalpur, Dera
Ghazi Khan and Hyderabad.
These reasons have also caused fluctuations in debt to equity ratio of
PTCL. The financial strength of PTCL was satisfactory till the end of Financial
Year 2007 but went alarming in Financial Year 2008 as the company’s TIE ratio
fell considerably. TIE ratio of PTCL had risen in the Financial Year 2006 despite
of decreasing revenue, but when the revenue went more down so it started fallen
and stopped at 47.53 in Financial Year 2007 which was 93.07 in 2006 and
become negative with the figure of (4.26) in 2008. The same situation occurred
with company’s EPS and dividends.

Comparision of EPS, Dividends and TIE Ratios of PTCL
(1.00)
-
1.00
2.00
3.00
4.00
5.00
6.00
2005 2006 2007 2008 2009 2010
Years
Rs.
(20.00)
-
20.00
40.00
60.00
80.00
100.00
%
EPS
Dividends
TIE Ratio
In the Financial Year 2005, the stock price of PTCL was 70.25 but in
Financial Year 2010 it came at 17.80. The stock has a beta of 1.06, which means
that returns on the stock are positively correlated with the market. On April 22nd
,
2011, the latest stock price of PTCL is Rs. 16.78 [19]. The period from January
2008 till February 2010, PTCL’s highest share price went to Rs. 50.80 per share
on 18th
April 2008 and lowest price was Rs. 12 per share on 26th
January 2009
[20], whereas the breakup value per share is maintained with a negligible
difference as shown in the following graph.
[1] http://www.firstglobalselect.com/scripts/cgiip.wsc/globalone/htm/quote _and_news.r?pisharetype-id=35385
[2] http://finance.kalpoint.com/highlights/corporate-news/telecommunication-pakistan-telecommunications-company-
limited-analysis-of-financial-statements-financial-year-2005-h-2001-2010.html

Market Value & Breakup Value of PTCL Overtime
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2005 2006 2007 2008 2009 2010
Years
Rs.
Market Value Per
Share
Breakup Value Per
Share

CHAPTER NO.08 PROBLEMS & PROSPECTS
8.1 Problems................................................................................. 47
8.2 Future Prospects..................................................................... 49

8.0 PROBLEMS & PROSPECTS
8.1 Problems
Despite of aids, loans and other helps from the developed countries and
the other financial institutions of the world some developing countries are still
striving for the betterment of their networks of telecommunication. The
privatization is one way to make them a competent organization. Some of the
major issues with telecommunication sector are described below:
1. Partial Infrastructure: Most of the developing countries have incomplete or
inefficient infrastructure of telecommunication. Their existing structure is either
outdated or insufficient to cope up the challenges of this modern world. As far as
Pakistan is concerned the most of the cities are covered with the services of
PTCL and other networks but the some villages are still lacking of this service
availability.
2. Scarce Human Resources: The most important problem faced by the
developing countries is the shortage of educated personnel. Since the literacy
rate in Pakistan is low and similarly the vacancies are not available so these
limited professionals start going abroad to get a better job and when they are
required so they are unavailable. The telecommunication sector needs qualified
technicians and engineers as it is not the game of every type of person.
3. Lack of Information: Another major problem face by the underdeveloped
countries is the lack of information. In Pakistan, many sectors in many areas are
working without having the relevant information. The part of information in the
industry like telecommunication is a core competency for survival in the market.
The financial statements of the companies are sometimes never audited or
audited on irregular basis which leaves the remarks that companies are not

following GAAP standards. With this situation many companies like ESCON and
WorldCom are closed. The main reason for their closure is because of
presentation of false picture of company’s accounts, just to keep shareholders
satisfied. This problem sometimes becomes crucial hurdle in the progress of the
country.
4. Undeveloped Capital Markets: The investment rate of the company lowers
down with the undeveloped capital markets as the local investors could not able
to invest in the company. The management of the company faces problems in
leasing of its assets and many other financial aspects. The stock market could
not able to present a clear picture of the company’s financial position because
the stock markets of the undeveloped countries are working in a small context.
The local arrangement of finance for local investors is very hard, and the foreign
investors would not likely invest due to very low interference of capital market,
which helps in presenting a true picture of company’s financial history and its
predictions.
In such cases the telecommunication sector would be difficult to survive as
it requires periodical innovations in its services to manage them with the global
environment.
5. Security: The risk of capital return is parallel to the economic condition of the
country. Uncertain economic conditions, where government fails to give
protection to the business entities, lead towards no investment or very low
investment in the country. Government has to take certain steps for the
development of telecommunication industry in the country. The foreign investors
if interested with the development in the telecom industry of an underdeveloped
country, so their first concern is about the security matters. Some of the
multinational corporations are making investments in the developing countries,
but their part of investment is very low, that is covered with the rising problems of
the citizens, or some corporations if invest, so in their own subsidiary companies.

8.2 Future Prospects
The world of telecommunication has become an integral part of every
person’s social, economic, global and political life. This industry has reached its
peak recently. The most important thing in this sector, it motivates new ideas and
defines the products and services in a more convenient manner than before. The
products and services are continuously modifying with the modification as per the
requirements and wants of customers.
The telecommunication sector not restricts within the boundaries of home
customers but corporations and businesses are also being catered with its
services. It will not be wrong if it is said that every industry and every citizen of
Pakistan is taking benefit from the services offered by telecommunication. The
competition between the organizations is increasing with a high pace. The
presence of its services now becomes a need for survival in this world.
The telephone was converted in cordless phone, then mobile phone was
invented, great changes have occurred with every new model of cellular phones
and now they are available with the services of computer and internet. The wired
technology is converted into digital one and become easier to interact with distant
people. A latest technology launched by “Mobilink Pakistan” is “Blackberry
Playbook”. With the entrance of new innovated technologies the prices of the
previous ones lowers down. This is making the service available and economical
for every class of people.
Telecommunication always welcome the new developments in the world
as its boundaries are limitless. Moreover, there are still some underdeveloped
countries which are lack from the benefits of this sector. The opportunities and
new markets are available to cater, if convergence should be made with other
stable residential industries and help is provided those underdeveloped countries
so they can also come in the race of this modern world. The main reason which
restricts the services of telecommunication is their development.
Internet has a greater part in the development of telecommunication
sector. People can be connected easily from anywhere in the world at anytime.

The products and services are single click away from the reach of customers.
The competition of future will be for the first serve, the expenses for using
telecom is very low currently, but in near future they will become zero. All the
charges of customers will be born by the companies who are willing to advertise
their products and services

.
CHAPTER NO.09 QUESTIONNAIRES
9.1 Questionnaires Analysis ......................................................... 52

9.0 QUESTIONNAIRES
9.1 Questionnaires Analysis
Question No.01:
Do you use telecommunication services?
a. Yes
b. No
Objective:
This question was framed to justify the sample and make sure that the target
respondents do actually use telecom service. This question was entered as the
first in order to allow the respondents to fill rest of the questionnaires.
Analysis:
The response to the question provided full justification to my choice of
respondents. It can be observed from the results, 100% of the respondents have
said affirmative to the question. This helped me in assessing their answers as
coming from qualifying respondents.
Frequency Percent Valid Percent Cumulative %
Yes (valid) 30 100.0 100.0 100.0
No 0 0 0 100.0
Total 30 100.0 100.0

0
5
10
15
20
25
30
Number of
respondents
Yes (valid) No
Question No.02:
Which service of telecommunication do you use mostly?
a. Landline
b. Wireless phone
c. Cellular phone
d. Any other __________
Objective:
The objective of this question was to get an idea about the type of service used
most by the target market. As the sample is a true representative of the target
market, this question allowed me to get an idea of the distribution of type of using
telecom service.
Analysis:
The analysis shows that cellular phones and landline dominated the services.
The response indicates that cellular phones have the highest share.

Frequency Percent Valid Percent Cumulative
%
Landline 11 37.0 37.0 37.0
Wireless Phones 2 6.7 6.7 43.7
Cellular Phones 16 53.0 53.0 97.6
Others 1 3.3 3.3 100.0
Total 30 100.0 100.0
Telecom Services
Landline
37%
Wireless
Phones
7%
Cellular Phones
53%
Others
3%
Landline
Wireless Phones
Cellular Phones
Others

Question No.03:
Which is the main factor of using your service of telecommunication?
a. Cost
b. Quality
c. Service
d. Portability
e. Any other __________
Objective:
The objective of this question is to identify those factors that are considered by
the people while using a particular service. Another objective of the question is
that it may help me to identify the factors which are not present in PTCL.
Analysis:
The result shows that the reasons for using any telecom service are because of
service and cost. The “cost” factor reaffirms the analysis of the previous question
were the share of cellular phones was the highest. The probable cause for this is
because the cost in the minds of the people.
%
Cost 7 23.3 23.3 23.3
Quality 5 16.7 16.7 40.0
Service 10 33.3 33.3 73.3
Portability 5 16.7 16.7 90.0
Others 3 10.0 10.0 100.0
Total 30 100.0 100.0

Using Telecom Service
Cost
23%
Quality
17%
Service
33%
Portability
17%
Others
10%
Cost
Quality
Service
Portability
Others
Question No.04:
Which is your current using telecommunication service?
a. Mobilink
b. Telenor
c. WorldCall
d. PTCL
e. Ufone
f. Warid
g. Any other __________
Objective:
The reason for asking this question is to identify those networks which have
made their places in the minds of the people and attract them when selecting any
network.
Analysis:
The analysis shows that 26% of the respondents use Mobilink, and 74% of the
other respondents use Telenor, PTCL, and other telecom networks.

%
Mobilink 8 26.7 26.7 26.7
Telenor 5 16.7 16.7 43.4
WorldCall 0 0 0 43.4
PTCL 6 20.0 20.0 63.4
Ufone 7 23.3 23.3 86.7
Warid 3 10.0 10.0 96.3
Other 1 3.3 3.3 100.0
Total 30 100.0 100.0
0
1
2
3
4
5
6
7
8
Numberofrespondents
Mobilink Telenor WorldCall PTCL Ufone Warid Other
Currently Using Telecom Service by People

Question No.05:
Do you like the service of PTCL?
a. Yes
b. No
Objective:
The objective to ask this question from respondents is to make clear whether the
people like its services, do PTCL’s services are satisfying the people.
Analysis:
The analysis of this question shows that 83% of the respondents like the services
of PTCL and 16% of the respondents don’t.
%
Yes 25 83.3 83.3 83.3
No 5 16.7 16.7 100.0
Total 30 100.0 100.0
PTCL's Serivce Satisfaction
Yes
83%
No
17%
Yes
No

Question No.06:
If you are not the currently user of the service of PTCL then what could be the
reasons?
a. Bad service
b. Expensive
c. Delayed innovation
d. Any other
Objective:
The objective of this question is to identify the reasons from the people that why
they left using the PTCL service.
Analysis:
The analysis of this question shows that more people do not like the services due
to their solution in a long time and some of the people think that PTCL has a
delayed innovation.
%
Bad service 16 53.3 53.3 53.3
Expensive 6 20.0 20.0 73.3
Delayed
innovation
5 16.7 16.7 90.0
Others 3 10.0 10.0 100.0
Total 30 100.0 100.0

PTCL's Service
Bad service
53%
Expensive
20%
Delayed
innovation
17%
Others
10%
Bad service
Expensive
Delayed innovation
Others
Question No.07:
Do you find any change in PTCL after its privatization?
a. Very much
b. Very little
c. Not at all
Objective: The objective of this question is to identify the methodology of
privatization from the people that what change they find with privatization.
Analysis: The analysis of this question shows that more people like the services
after privatization and give their decision in the favor of PTCL’s Privatization and
some of the people think that no change has occurred by privatization of PTCL

%
Very much 19 63.3 63.3 63.3
Very Little 6 20.0 20.0 83.3
Not at all 5 16.7 16.7 100.0
Total 30 100.0 100.0
PTCL after Privatization
0
2
4
6
8
10
12
14
16
18
20
Very much Very Little Not at all
Numberofrespondents
Question No.08:
Do you prefer PTCL over other networks while making any call?
a. Very much
b. Sometimes
c. Very few
d. Never
Objective: The objective of this question is to find out the answer from the
respondents that whether they prefer PTCL over other telecom networks. This
question could show me the liker scale of the people with PTCL.

Analysis: The analysis shows that 43% of the respondents like PTCL very much
and think that they prefer PTCL over other networks; 30% of the respondents
believe that they sometime prefer PTCL.
Frequency Percent Valid Percent Cumulative %
Very Much 13 43.3 43.3 43.3
Sometimes 9 30.0 30.0 73.3
Very Few 5 16.7 16.7 90.0
Never 3 10.0 10.0 100.0
Total 30 100.0 100.0
Liker Scale of PTCL
0
2
4
6
8
10
12
14
Very Much Sometimes Very Few Never
Numberofrespondents
Question No.09:
Are you satisfied with the quality of all the services provided by PTCL?
a. Yes
b. No
Objective: The objective of this question is to make clear that the actual reason
that customers left this network is not “Expensive”.

Analysis: The analysis of this question shows that 90% of the respondents are
satisfied with the quality of the services provided by Arena.
%
Yes 13 43.3 43.3 43.3
No 17 56.7 56.7 100
Total 30 100.0 100.0
0
2
4
6
8
10
12
14
16
18
Numberofrespondents
Yes No
Satisfaction from Services of PTCL
Question No.10:
Will you prefer PTCL for using if its services become better?
a. Yes
b. No
Objective: The objective of this question is to find out the whether the people will
use PTCL if the problems regarding service are solved or complaints
management will be developed.

Analysis: The analysis shows that the people will use PTCL if it develops its
services its products, services, & different discounts.
%
Yes 22 73.3 73.3 73.3
No 8 26.7 26.7 26.7
Total 30 100.0 100.0
Future preference to PTCL
0
5
10
15
20
25
Yes No
Numberofrespondents

CHAPTER NO.10 HYPOTHESIS TESTING
10.1 Hypothesis No. 01................................................................. 66
10.2 Hypothesis No. 02................................................................. 67

10.0 HYPOTHESIS TESTING
10.1 Hypothesis No.1
“At least 50% of the population avoids using PTCL because of bad customer
service”
Derived from Question # 6
Null Hypothesis Ho : P = 50%
Alternate Hypothesis H1 : P ≤ 50%
The above hypothesis was tested at 95% level of confidence. Therefore z = 1.64
since it is a one-tailed test.
_________
The standard error of proportion = √P(1-P)/n-1
Where, p = 0.5 &
n = 30
Therefore standard error of proportion = 0.0928
Critical value = p+z (standard error of proportion)
Critical value = 0.5+1.64(0.0928) = 0.6522 or 65%
The analysis of Question No. 6 shows that the observed value was 53.3%
Interpretation:
Since the observed value is greater than the critical value, therefore we accept
null hypothesis.

10.2 Hypothesis No.2
“At least 70% of the population will use PTCL if its services become better”
Derived from Question # 10
Null Hypothesis Ho : P = 70%
Alternate Hypothesis H1 : P ≤ 70%
The above hypothesis was tested at 95% level of confidence. Therefore z = 1.64
since it is a one-tailed test.
_________
The standard error of proportion = √P(1-P)/n-1
Where, p = 0.7 &
n = 30
Therefore standard error of proportion = 0.085941
Critical value = p+z (standard error of proportion)
Critical value = 0.7+1.64(0.085941) = 0.8409 or 84%
The analysis of Question # 10 shows that the observed value was 73.3%
Interpretation:
Since the observed value is greater than the critical value, therefore we accept
null hypothesis.

CHAPTER NO.11 RESEARCH FINDINGS
11.1 Findings from Questionnaires............................................... 69
11.2 Findings from Interviews....................................................... 70

11.0 RESEARCH FINDINGS
11.1 Findings from Questionnaires
Question No.01:
Do you use telecommunication services?
The response to this question has provided full justification that all the selected
respondents are the users of telecommunication service.
Question No.02:
Which service of telecommunication do you use mostly?
The analysis shows that landline and cellular phones dominated among all. The
response indicates that cellular phone has the highest share.
Question No.03:
Which is the main factor of using your service of telecommunication?
The result shows that the reasons for choosing any telecommunication service
because of services (customer support) and cost. This factor reaffirms the
analysis of the previous question were the market share of cellular phones was
the highest.
Question No.04:
Which is your current using telecommunication service?
The result shows that many respondents have given their frequently use service
in which “Mobilink” has the highest share. The question suggests that the
popularity of PTCL has been decreased due to increase in market competition.
Question No.05:
Do you like the service of PTCL?
The response to this question shows that more customers are satisfied with the
services offered by PTCL.

Question No.06:
If you are not the currently user of the service of PTCL then what could be
the reasons?
The response to this question leaves the signal that more people are not
currently the user of PTCL due to its after sale service.
Question No.07:
Do you find any change in PTCL after its privatization?
The response to this question shows that after privatization of PTCL a great
change has been occurred in its products and services which is liked by the
people.
Question No.08:
Do you prefer PTCL over other networks while making any call?
The respondents like the service of PTCL and prefer it over other networks for
making any call as somehow every network is connected to PTCL.
Question No.09:
Are you satisfied with the quality of all the services provided by PTCL?
The respondents are not satisfied with the quality of services given by PTCL and
56% customers even who like its services have certain queries regarding the
PTCL services.
Question No.10:
Will you prefer PTCL for using if its services become better?
The response to this question shows that the respondents will use the PTCL
services if some developments will be made.
11.2 Findings from Interviews
The unstructured interviews with the customers of PTCL leaves an impact
that the company shall have to strive more powerfully in this competitive era of

telecommunication, still PTCL is a giant organization in its industry. The
customers have to still visit the PTCL centers for the clearance of their left
connections. Even they have to visit for months for this, wrongly dues sometimes
charged to the loyal customers. The landline facility is being negatively used by
the own PTCL personnel which makes the bills of regular user higher than
before.
.. Another important fact that PTCL even having the market coverage all over the
country is very slow is catering the competitive services in the market as the
other companies are offering. We have seen some newly an innovated service of
PTCL like “PTCL – Smart TV”, these services shall be continued which can make
the company, its services and products better for their customers.

CHAPTER NO.12 CONCLUSION &
RECOMMENDATIONS
12.1 Conclusion ............................................................................ 73
12.2 Recommendations................................................................ 74

12.0 CONCLUSION AND RECOMMENDATIONS
12.1 Conclusion
The report gives a clear historical view from the start of telecommunication
sector in Pakistan. It describes how PTCL came into being and what different
scenarios it had faced. Since PTCL relates with telecommunication industry
which always deals with the fast and innovated technologies that can provide
more satisfaction to the customers then before.
The introduction of new technologies in the field of telecom industry for
government would become costly when a competitive market is about to evolve.
The need of privatization of PTCL starts from here, this giant organization should
also have capability to face and compete in the market with innovations in its
products and services and not only because of its monopoly in the landline.
The privatization of PTCL costs the Government of Pakistan because it was
the oldest organization which lacks with competitive personnel; this weakness
was covered to some extent but made the financial position of the company more
shocking. PTCL had well managed itself during the past five years. It has
covered more areas and developed its products and services well as compare to
Pakistan Telecommunication Corporation – a corporation before privatization)
12.2 Recommendations
The services that are provided by PTCL shall have to be more developed
especially the landline users have more complaints about the late actions on their
applications, the disconnection of service will be continued for months, etc. Some
of the recommendations are as follows:
PTCL has to make and develop their service of WLL which can be used
as a substitute of landline.
The usage of WLL technology will decrease the maintenance cost of the
company, another advantage of this technology is that it is more
convenient in the remote areas where landline network is not available.

Customer Care Centers of PTCL shall be increased and a proper
management system shall be implemented.
The landline connection shall be offered free so that all the developed
cities can use this service fully; this can increase the revenues of PTCL.
Most of the customers are unaware about the products and services of
PTCL, low advertisement could not able to cater more people as huge
advertisements are done by the other telecommunication companies.

REFERENCES
1. http://en.wikipedia.org/wiki/Emirates_Telecommunications_Corporation
2. http://telecompk.net/2007/09/04/ptcl%E2%80%99s-privatization-the-biggest-
financial-scam-in-pakistan%E2%80%99s-history/
3. http://wiki.answers.com/Q/What_is_the_types_of_privatization
4. http://www.forumpakistan.com/ptcl-privatization-t5256.html#ixzz1Jr30KOgI
5. http://www.privatisation.gov.pk/about/Completed%20Transactions%20(new)
.html
6. http://www.privatisation.gov.pk/about/Completed%20Transactions%20%28n
ew%29.html
7. http://www.teralight.com/wpapers/how-PTCL-will-look-like-after-
privatization.pdf
8. Pakistan Telecom PTA Annual Report 2009 – 2010
9. propakistani.pk/.../sale-ptcl-26-percent-shares-what-actually-happened/
10. PTCL Annual Report 2009 – 2010
11.www.ptcl.com

ANNEXURE
Annexure – 01 (Statement of Financial Position)

Annexure – 02 (Statement of Comprehensive Income)

Annexure – 03 (Statement of Cash Flows)

Annexure – 04 (Financial Highlights)

Causes and Remedies of Privatization of PTCL

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