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2012-08-13
Net Income reached US$ 58m while economic activity in the market place is experiencing retraction on the short term
Classified by Palestine exchange as the leader company in dividends payout , distributed over 90% of USD 74.2 Million to shareholders this year
The Palestine Telecommunications Company, PalTel announced its financial results for the first half of 2012. Consolidated net operating revenues grew by 0.3% to reach US$ 258m at the end of H1-2012 compared with US$ 257m at the end of H1-2011. In regards to the operating revenues of each segment, the company achieved a growth in its mobile and data revenues by 0.6% and 68.8% respectively while fixed Line and Media revenues dropped by 9.0% and 11.8% respectively.
The consolidated operating income reached US$ 83m by the end of H1-2012 compared with US$ 91m by the end of H1-2011,. The growth rates in revenues and operating results for the current period have been affected by several external developments, principal of which was the devaluation of the Israeli Shekel (collection currency) versus the Jordanian Dinar (reporting currency) where the average exchange rate during the first six months of 2012 was 5.36 ILS/JOD compared to 4.96 ILS/JOD the same period of last year.
The consolidated net income stands at US$ 58m at the end of H1-2012 compared with US$ 67m at the end of H1-2011. The decline is mainly attributable to the devaluation of the Israeli Shekel and as a direct result to the company"s decision to postpone the 50% tax exemption for two years in response to a request by the government in order to alleviate the public financial crisis; Paltel is entitled for this exemption as part of the law of encouragement of investment in Palestine. Another exogenous factor is the new income tax bracket of 20% imposed this year by the government compared to 7.5% the year before. As a result of the fiscal crisis in the public sector, the tax authorities in Palestine have declared a new tax scheme raising the corporate tax rate from 15% to 20% starting January 2012.
Sabih Masri, Chairman of PalTel stated that "Throughout the years we have experienced strong growth in our net operating revenues and our operating revenues in core business operations in terms of mobile and data services. Although there has been a decline in our operating income this quarter, it is due to the impact of the revised Tax Law that was enforced beginning of this year in addition to an economic slowdown in Palestine. Masri further stated that "by the end of the fiscal year, we hope that our accumulated results will reflect more positive results in all operational indicators as we continue to work on the short term plans and continue to develop on the long term vision of the Telecommunications sector in Palestine."
Ammar Aker, CEO of Paltel Group stated, "we are confident that we will absorb the sudden interruptions caused by the new tax bracket, the tax exemption waiver plus foreign currency fluctuations in the short term as we continue to adapt implementing a prudent strategy of both growing our customer base and preserving our customer loyalty. We believe the current turbulence and uncertainty is tied to external factors and we are hopeful that before end of year the economic conditions will stabilize and the impact on our results shall be diluted by end of the year"
Current Operating Performance
Fixed Line
The number of fixed line subscribers witnessed 1.8% growth rate to stand at 392K subscribers compared with 385K as of the end of year 2011. This growth resulted from new acquisition campaigns.
The average monthly revenue per fixed line subscriber reached US$19.3 at the end of H1-2012 compared with US$21.1 at the end of 2011 and US$20.4 at the end of H1-2011.
Mobile
Mobile subscribers grew by 7.8% to stand at 2.61m at the end of H1-2012 compared with 2.42m at the end of 2011, and grew by 12.9% compared with the end of H1-2011 where the total number of subscribers was 2.31m. The composition (split between) of the prepaid and postpaid subscribers was 89.9% and 10.1% respectively.
This growth in the number of mobile subscribers was affected by several acquisition campaigns and new products and services that targeted existing and prospective customers.
The blended ARPU reached US$13.2/subscriber/month during the first half of 2012 compared with US$14.7 in H1-2011 and US$14.3 for the full year 2011. This decrease in the ARPU H1-2012 vs. H1-2011 is attributable to the larger customer base, low ARPU of new customers, offering larger discounts to the customers and the exchange rate differential.
Data
The data segment achieved a 7.4% growth rate in the number of ADSL lines to stand at 167K lines by the end of H1-2012 compared with 156K lines as of the end of 2011, and grew by 21.6% compared to H1-2011 where the base was 138K lines. This increase in customer base was accompanied by a decline in ARPU which reached US$14.1 in H1-2012 compared to US$18.8 by year end 2011. In addition, penetration rate of the ADSL lines (per landline) increased from 40.5% at the end of 2011 to 42.7% at the end of H1-2012
Future Outlook
The company will continue to employ a long term strategy of growing new customer base in its core services, Mobile, Fixed Line and Data services while servicing current customers and offering competitive price offers to meet economic realities of these customers. The company continues to invest in technological advancements to remain at edge with new value added offers and to prepare the network for 3G services to be ready once the frequencies are Obtained . The company will also investigate other investment opportunities in new areas as it continues to diversify its sources of income. With more than 82% market share and with 70% penetration rate, we are still confident of capturing future growth in the telecom market in the Palestinian territories.
About Paltel
Palestine Telecommunication Company ("PalTel") is an integrated telecom operator offering fixed, mobile, Internet and data services throughout The Palestinian Territories. Paltel is publicly listed on the Palestinian Stock Exchange (PSE). Paltel owns majority equity ownership in Paltel (fixed line operator), Jawwal (Mobile Operator), Reach (Call Centre services), Palmedia (Information and Media Services Provider), Hulul (Business Solutions Provider) and Hadara (ISP Services). Paltel also owns equity in Vtel Holdings a Dubai-based multinational telecommunications company with interests in Middle East, Asia and Europe. As of August 1 2012, Jawwal has 2.61 million mobile customers, 392K fixed line customers and 167K ADSL customers.
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