PTCL Group returns to profit despite Rs1bn revenue hit from network closures

Pakistan Telecommunication Company Limited (PTCL) Group returned to profitability in the July-September quarter of 2026 despite an estimated Rs1 billion revenue loss from network closures in Azad Jammu and Kashmir (AJK) and rising operating costs.

Management pointed to subscriber growth and expected savings from its integration with Telenor Pakistan.

How did PTCL Group return to profit in the third quarter?

PTCL Group posted a net profit of Rs62 million in the July-September quarter, against a loss of Rs1.3 billion a year earlier. Management said profit could have reached Rs2.1 billion, or Rs0.41 per share, without higher costs and a new regulatory charge.

Management said the network disruptions also affected its microfinance banking subsidiary, which faced an additional financial impact of Rs600 million from the increased suspension of markup income. Revenue remained largely unchanged from the previous quarter, partly due to network closures in AJK and, to a lesser extent, in Khyber Pakhtunkhwa and Balochistan.

The group’s profitability was also constrained by higher energy costs, a new regulatory charge on international incoming calls, and increased interest and depreciation expenses following its acquisition of Telenor Pakistan.

How many subscribers did PTCL Group add?

Despite the operating challenges, Ufone’s combined wireless subscriber base, including Telenor Pakistan, crossed 76 million, of which 52.6 million were 4G users. The company added 1.5 million net subscribers during the quarter, accounting for about 40% of total net additions across the telecommunications industry.

Wireless average revenue per user (ARPU) stood at Rs315 per month, while pre-merger ARPU increased 6% through September. Management said Telenor’s ARPU was also improving, with further gains expected from network integration and operational consolidation.

PTCL Group is also implementing price increases across fixed-line and wireless services to offset inflation and higher energy expenses.

What is driving PTCL Group’s energy and regulatory costs?

Energy remains a significant operating expense. Diesel and other fuels account for about 43% of the group’s energy costs, with the remainder coming from electricity, management said.

The company is pursuing cost-saving measures, including solar power installations, battery-as-a-service arrangements, network consolidation and other energy solutions. It expects savings from reduced site operations to emerge gradually, followed by further benefits from closing overlapping sites and rationalizing vendor contracts.

Another cost pressure is a regulatory charge of 0.5 US cents per minute on international incoming traffic, payable to the Pakistan Telecommunication Authority (PTA). The charge took effect towards the end of the second quarter, so the group faced its full impact during the third quarter.

Management expects the measure to discourage grey-market traffic and channel more international calls through formal networks over time. For now, it represents an additional recurring expense.

What is the status of the Telenor integration and 5G rollout?

The integration of Ufone and Telenor Pakistan is expected to generate savings through the closure of overlapping network sites, shared procurement, lower energy consumption and vendor rationalization. Management said integration had been completed in more than 20 cities. Network consolidation of over 40% is targeted by the end of 2026, with full integration expected by 2027.

Initial savings have already emerged, with larger benefits anticipated as the process advances. Meanwhile, PTML, which operates Ufone, has acquired 5G spectrum and launched services in Karachi, Lahore and Islamabad, with expansion to other major cities under way.

However, 5G-compatible handsets account for only about 4% of the market. Management expects the newly acquired spectrum, particularly the 2.6GHz band, to primarily strengthen 4G capacity and improve customer experience over the next two to three years as 5G adoption gradually increases.

Separately, PTCL has begun transferring its tower infrastructure to Orion Towers, a subsidiary established following the Telenor acquisition. The transfer is expected to take four to six months, after which the tower portfolio could be considered for a potential transaction.