1
?? We hold positive stance on the telecom sector of
Pakistan. Increase in teledensity levels, network
rollouts of cellular and wireless services in rural
areas, induction and expansion of broadband services,
continuous increase in inflows of foreign investments
and deployment of newer technologies
are some of the reasons upon which we are positive
on this sector.
?? The sector has attracted enormous amount of Foreign
Direct Investment (FDI) owing to increasing
foreign interest cultivated by the recent deregulation
by the Pakistan Telecom Authority (PTA), now
contributing around 35 percent of total FDIs in the
country.
?? We are also positive on local telecom giant PTCL
(KATS Code: PTC). Our value of PKR71 based on
sum-of-parts method yields a massive upside potential
of 56 percent. Though we do not expect any
dividend in FY08 due to one time impact of VSS
costs, the stock anyhow hold a reasonable dividend
yield of 4-5 percent on a longer term horizon.
Based on our rationales, we recommend “BUY” at
current levels.
?? Our rationales are supported by enormous and continuous
increase in Pakistan’s Teledensity, which
has surged beyond 52 percent. Even with this massive
improvement, most of rural population still remains
untapped, giving the operators vast room for
further growth.
Emitting the Right Frequency
Focus on Telecom Sector & PTCL
Source: ECL Research
Index: KSE-100 Vs. Telecom
?? The Pakistan Horizon
?? Telecom Dynamics
?? Regulatory Regime
?? Teledensity and Penetration
?? The Flow of FDIs
?? Trends and Technologies
?? Growth Potential
?? PTCL
?? VSS
?? Financials
?? Ufone
?? Valuations
Conte ...