Karachi: PTCL is one stock which has out performed KSE 100 index by 12% so far in 3 trading sessions following the news flow that government is planning to cancel all pre-paid SIMs which may rejuvenate PTCL landline revenues and resurfaced rumors regarding establishment of ICH (International Clearing House) which will increase ASR (Approved Settlement Rates) effecting positively on its revenues.
With US$4bn worth telecom industry under threat of loosing its prepaid cellular customers, there is increased anticipation amongst investors that PTCL will stand as the major gainer.
They believe that the move will rejuvenate PTCL’s ailing fixed line business as gov’t tries to discourage prepaid SIMs. However, it is not anticipated any major change in PTCL’s revenue even if government tends to cancel all undocumented pre-paid SIMs.
However, the government authorities has indicated that there is no such plan under consideration to block prepaid SIMs, while we also believed the proposed steps seems impractical on account of its determinant effort on future dynamics of the sector and could constrain the fiscal space to the gov’t.
Therefore, though the gov’t is likely to take measures to increase documentations of cellular consumer base, it is highly unlikely that all or significant percentage of prepaid SIMs will be blocked.
The area of interest for the investors is the resurfaced rumors regarding formation of ICH that created excitement in the scrip few months back also. Though, investors still await material development on this front, formation of ICH could substantially augment PTCL profitability.