Ptc l Annual Report 2012

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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limited


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Contents

Company Review

4-5 Corporate Vision, Mission & Core Values

6-7 Board of Directors8 Corporate Information9 Awards and Achievements

10-11 The Management12-15 Operating Highlights - Graphs16-17 Group CEO's Message18-35 Directors' Report

36 Composition of Board's Sub-Committees36 Attendance of PTCL Board Members38 Statement of Compliance with CCG39 Auditors' Review Report to the Members

Financial Statements

43 Auditors' Report to the Members

44-45 Statement of Financial Position46 Statement of Comprehensive Income47 Statement of Cash Flows48 Statement of Changes in Equity

49-90 Notes to and Forming Part of the Financial Statements

Consolidated Financial Statements

93 Auditors' Report to the Members

94-95 Consolidated Statement of Financial Position96 Consolidated Statement of Comprehensive Income97 Consolidated Statement of Cash Flows98 Consolidated Statement of Changes in Equity

99-153 Notes to and Forming Part of the Consolidated Financial Statements

Annexes

156-164 Pattern of Shareholding165 Notice of 17th Annual General Meeting167 Form of Proxy

Annual Report 2012


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Pakistan Telecommunication Company Limited

Vision & Mission

Corporate Vision Mission

To be the leading ICT service provider in the region To achieve our vision by having: Servicesthatarebasedonthemostoptimumby achieving customers satisfaction and maximizing technology.

Anorganizationalenvironmentthat

fostersshareholders value.

professionalism, motivation and quality. QualityandTimeconsciouscustomerservices.

AnenvironmentthatiscosteffectiveandqualitySustainedgrowthinearnings

andprofitability.conscious.


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Annual Report 2012 Annual Report 2012Core Values

ProfessionalIntegrityCustomerSatisfactionTeamworkCompanyLoyalty


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AmIrTArIQ ZAmAnKhAnBoard of DirectorsABDULRAHIM A. AL NOORYANI ABDUL WAjID RANA JAmIL AhmedKhAnJAmIL AhmedKhAnSerKAnOKAndAnPakistan Telecommunication Company LimitedAmIrTArIQ ZAmAnKhAnBoard of DirectorsABDULRAHIM A. AL NOORYANI ABDUL WAjID RANA JAmIL AhmedKhAnJAmIL AhmedKhAnSerKAnOKAndAnPakistan Telecommunication Company LimitedChairman PTCL Board Member PTCL Board Member PTCL Board Member PTCL Board MemberPTCL BoardMember PTCL BoardMember PTCL Board


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FADHIL AL ANSARI KAmrAnALIWALID IRSHAID dr. dAnIeLrITZjAMAL SAIF AL jARWANAnnual Report 2012FADHIL AL ANSARI KAmrAnALIWALID IRSHAID dr. dAnIeLrITZjAMAL SAIF AL jARWANAnnual Report 2012Member PTCL Board Member PTCL Board Member PTCL Board Member PTCL Board President & Chief Executive Officer


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Corporate Information

Management

Walid Irshaid

President & Chief Executive Officer

Muhammad Nehmatullah Toor

SEVP (Finance) / Chief Financial Officer (CFO)

Syed Mazhar Hussain

SEVP (Admin & Procurement / Human Resource)

Sikandar naqi

SEVP (Corporate Development)

Naveed Saeed

SEVP (Commercial)

Muhammad Nasrullah

Chief Technical Officer (CTO)

Hamid Farooq

SEVP (Business Development)

Furqan habibQureshi

SeVP(BusinessZoneSouth)

jamal Abdalla Salim Hussain Al Suwaidi

SeVP

(BusinessZoneCentral)

JamilKhwaja

SeVP


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(SpecialProjects)

Ahsan Aziz

Acting Chief Information Officer (CIO)

Company Secretary

FarahQamar

Legal Affairs

ZahidaAwan

Bankers

AlliedBank

LimitedAskariBankLimitedBankAlfalahLimitedBankAl habibLimitedCitibank. n.AdubaiIslamic

BankFaysalBankLimitedhabibBankLimitedhabib metropolitanBankLimitedmCBBankLimited

meezanBankLimitednationalBankofPakistannIBBankLimited


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SilkbankLimitedSme BankLimitedStandardCharteredBank(Pakistan)LimitedTheBankofPunjabUnitedBankLimited

Auditors

A. F. Ferguson & Co.,Chartered Accountants

Ernst & Young Ford Rhodes Sidat Hyder,

Chartered Accountants

Registered Office

PTCL Headquarters

Sector G-8/4,

Islamabad-44000,Pakistan

Tel: +92-51-2263732 & 34Fax: +92-51-2263733

e-mail:[email protected]:www.ptcl.com.pk

Share Registrar

M/s FAMCO Associates (Pvt.) Limited

Ground Floor, State Life Building No. 1-A,

I.I.Chundrigar road,Karachi-74000Tel: +92-21-32422344, 32467406Fax: +92-21-32428310


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Awards and Achievements 2011-2012Highest Quality Broadband Internet Service to ConsumersbyPakistanTelecommunicationAuthorityBest Telecom Operator in South Asiaby International SAMENA AwardBest Wireless Broadbandby Consumer Choice AwardNational Environmental Excellence Awardby National Forum for Environment & Health (NFEH)Best Corporate Social Responsibility Initiative Awardby NFEH and United Nations Environment ProgramESRI Special Achievement in GIS Awardby U.S.-based Environment Systems Research Institute (ESRI)2nd Global HR Excellence AwardbyGlobal mediaLinks&Business milestonesofPakistan10th Teradata National IT Excellence Awardfor3G eVOWirelessBroadbandInternetProjectAnnual Report 2012Awards and Achievements 2011-2012Highest Quality Broadband Internet Service to ConsumersbyPakistanTelecommunicationAuthorityBest Telecom Operator in South Asiaby International SAMENA AwardBest Wireless Broadbandby Consumer Choice Award

National Environmental Excellence Awardby National Forum for Environment & Health (NFEH)Best Corporate Social Responsibility Initiative Awardby NFEH and United Nations Environment ProgramESRI Special Achievement in GIS Awardby U.S.-based Environment Systems Research Institute (ESRI)2nd Global HR Excellence AwardbyGlobal mediaLinks&Business milestonesofPakistan10th Teradata National IT Excellence Awardfor3G eVOWirelessBroadbandInternetProjectAnnual Report 2012


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ManagementPakistan Telecommunication Company LimitedManagementPakistan Telecommunication Company LimitedWalid Irshaid Muhammad NasrullahPresident & Chief Executive Officer Chief Technical Officer (CTO)Muhammad Nehmatullah Toor Hamid FarooqSEVP (Finance) / CFO SEVP (Business Development)Syed Mazhar Hussain Furqan Habib QureshiSEVP (Admin & Procurement / Human Resource) SeVP(BusinessZoneSouth)Sikandar Naqi Jamal Abdalla Salim Hussain Al SuwaidiSEVP (Corporate Development) SeVP(BusinessZoneCentral)Naveed Saeed Jamil KhwajaSEVP (Commercial) SeVP(Special

Projects)Ahsan AzizActing Chief Information Officer (CIO)


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Annual Report 2012 Annual Report 2012


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Operating HighlightsPakistan Telecommunication Company LimitedYear ended june 30 2012 2011 2010 2009 2008

2007

Key Indicators

OperatingPre tax margin (EBIT margin) % 19.13 21.03 25.68 25.20 (5.45) 34.13Net margin % 12.01 13.44 16.26 15.45 (4.26) 22.01

Performance

Fixed assets turnover Times 0.80 0.75 0.75 0.74 0.81 0.89Debtors' turnover Times 6.69 5.71 5.46 4.91 5.35 4.86Return on equity % 7.08 7.50 9.33 9.28 (2.71) 14.45Return on capital employed % 6.11 6.40 7.40 7.20 (2.21) 11.89Retention % 100.00 (20.15) 3.97 16.40 100.00 34.78

LeverageDebt:Equity Ratio 18:82 18:82 15:85 14:86 14:86 12:88Leverage % 33.53 35.38 33.87 35.66 27.48 27.92

Time interest earned Times 23.85 56.00 36.42 16.43 (4.26) 47.54

LiquidityCurrent Times 2.30 1.39 1.51 1.50 1.81 2.19QuickTimes2.16 1.27 1.37 1.36 1.58 2.03

Valuation

Earnings per share Rs. 1.41 1.46 1.82 1.79 (0.55) 3.07Breakupvalue

persharers.20.69 19.27 19.56 19.49 19.19 21.75Dividend payout ratio % -120.15 96.03 83.60 -65.22Price earnings ratio Times 9.68 9.76 9.77 9.61 (69.76) 18.59marketpricetobreakupvalueTimes0.66 0.74 0.91 0.88 2.01 2.62

Dividend per share Rs. -1.75 1.75 1.50 -2.00Dividend yield % -12.31 9.83 8.70 -3.51Dividend cover ratio Times -0.83 1.04 1.20 -1.53marketvaluepershare(asonJune


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30)rs.13.69 14.22 17.80 17.24 38.64 57.00

Historical Trends

Operating ResultsRevenue Rs. (m) 60,038 55,254 57,175 59,239 66,336 71,068Profit / (loss) before tax Rs. (m) 11,006 11,414 14,281 14,021 (4,463) 23,744Profit / (loss) after tax Rs. (m) 7,212 7,428 9,294 9,151 (2,825) 15,639Dividend Rs. (m) -8,925 8,925 7,650 -10,200

Financial Position

Share capital Rs. (m) 51,000 51,000 51,000 51,000 51,000 51,000Reserves Rs. (m) 54,474 47,262 48,759 48,390 46,888 59,913Shareholders' equity Rs. (m) 105,537 98,292 99,759 99,390 97,888 110,913EBITDA Rs. (m) 17,032 15,656 22,006 23,454 4,863 31,657Workingcapitalrs.(m)26,811 10,991 15,257 18,134 17,689 29,113Current assets Rs. (m) 47,359 39,012 45,450 54,220 39,603 53,561

Total assets Rs. (m) 156,949 152,520 150,768 154,048 140,104 152,821Non current liabilities Rs. (m) 30,863 26,207 20,816 18,572 17,646 17,460

OperationalALIS as on june 30 * No (000) 4,144 4,393 4,370 4,681 5,181 5,455Average ALIS Per Employee No 153 153 155 168 118 91

* Exclusive of Primary and Basic Rate interface


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Annual Report 2012


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Operating Highlights -Graphs

Profit / (Loss) Before and After TaxRevenue and Trade Debts(Rupees in billion) (Rupees in billion)

2007

2009 2010 2011 2012 2007 2008 2009 2010 2011 2012

2008Profit / (Loss) Before Tax

Profit / (Loss) After Tax

Revenue

Trade Debts

Current Assets and Current Liabilities Return on Operating Assets and Equity(Rup

ees in billion) (Percentage)

2007 2008 2009 2010 2011 20122007

2009 2010 2011 2012

Current Assets

Current Liabilities

Return on Operating Assets

Return on Equity

53.56

23.74

24.4515.64

21.9139.60

(4.46)

)(2.8254.22

14.02

36.099.15

45.45


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14.28

30.19

9.29

39.01

11.41

28.027.43

47.36

11.01

20.557.21

19.62

71.07

14.45

11.41(3.47))(2.7166.34

13.3711.40

9.28

59.24

9.33

12.25

10.7610.1757.18

10.06

7.50

55.25

9.179.62

7.08

60.04

8.79


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Annual Report 2012

Capacity: Installed Vs In ServiceDividend Payout per Share(Numbers in thousand)(Rupees)

8,807

5,455

9,011

5,181

9,015

4,681

9,358

4,370

9,953

4,393

8,743

4,144

2007 2008 2009 2010 2011 2012

3.07

200720082009 2010 2011 2012

0 1.411.46 1.751.75 1.821.50 1.79(0.55)02.00Earnings per ShareDividend per ShareALI excluding PRI/BRIALIS excluding PRI/BRI

Total Assets Vs Shareholders EquityBreakup Value Vs Market Value(Rupees in billio

n) (Rupees)

152.82110.91140.1097.89154.0599.39150.7799.76152.5298.29156.95105.5413.69 20.6914.22 19.2719.5617.8017.24 19.49


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38.6419.1921.75 57.002007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012Total Assets Shareholders Equity Market Value per ShareBreakup Value per Share15


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Group CEO's Message

Walid Irshaid


WWe are highly conscious of the fact that oursuccessandgrowthislinkeddirectlyto

satisfied customers. It remains a challenge to

provide seamless and prompt customer friendlyservice.

PTCLGrouphasbeenworkingdiligentlywiththefocus

to

assert ourselves as the dominant ICT service provider of

thecountry.Toachievethisgoalweembarked

onajourneyofmajorconsolidation,diversificationandcontinuous


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innovation. This year ended june 30, 2012 has seen the

resultsofourjourneyoverthelastfiveyears-fromabasic

telephony service provider to establishing the Group as theleading and dominant ICT service provider without dispute clearlyreflected in the turnaround seen during this currentyear.

The range of services and products that we introduced both forour wireline and wireless services provided PTCL the impetus

to reestablish ourselves as the foremost service providerof the country. Through diverse bouquet of our services weare facilitating both enterprise and household consumers byoffering them multiple solutions for their ICT needs while alsoextending vital services to other telecom service providers inthe country.

During the period we achieved phenomenal growth in DSLwith the foot print expanded to over 1800 cities and towns,

firmlyestablishingPTCL

byfarasthemarketleaderin

Broadband DSL services.

Our flagship brand 3G EVO wireless broadband, has gainedsignificantly in brand equity with the service now available

in more than 250 cities. Offering customers a world class

experience,ourwirelessbroadbandnetworknowsupportsspeeds


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upto9.3mbpsmaking3GeVOthefastestgrowingserviceinPakistan.

Despite the long prevailing challenging industry environment,we witnessed a steady revenue growth and a promisingincrease in customer acquisition and during the yearcelebrated the historic milestone of becoming the firstBroadband service provider in the country by acquiring ourfirst one million broadband customers.


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Annual Report 2012

We are highly conscious of the fact that our success and

growthislinkeddirectlytosatisfiedcustomers.Itremainsa

challenge to provide seamless and prompt customer friendly

service.Toensurethiswe

embarkedonseveralprojectsthat

were specifically aimed at improving customer experience.This year we made vital progress to this end through therollout of a new state-of-the-art Customer RelationshipManagement System.

Over the past few years the Company has gone through a

majortransformation,re-engineeringandprocessrefinementthatnowformsthebedrockfor

thenextfiveyearswhichwill

see us achieving new heights as a futuristic and innovativeICT service provider.


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Our future plans are devised with the focus on strengtheningour multi-play services using both wireline and wirelessplatforms with the specific focus on corporate solutions.We firmly intend to invest further and heavily in these areasensuring that our customer experience is enhanced manyfold and PTCL retains its position as the undisputed leader ofcorporate services solution provider.

Being the largest ICT service provider we continued toremain conscious and committed to our Corporate SocialResponsibility initiative through investing in the well beingof the society at large, while supporting and sponsoring

majorevents/projectsencompassingeducation,health,

environment and people with special needs.

It is a sense of great pride for us that during the year our

Company won several excellence awards. These included,

theLeadingOperatorinPakistanbyPTAs2011Quality

of Service survey for providing highest quality BroadbandInternet service to consumers; the prestigious international

SAmenAAward2011forbeingtheBestTelecomOperatorin

SouthAsia;the2012ConsumerChoiceAwardasthe


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Best Wireless Broadband Internet service provider and

the10thTeradatanationalITexcellenceAwardfor3GeVOWirelessBroadbandInternetproject.Oneoftheforemostachievementsforus

wasprestigiouseSrISpecial

Achievement in Geographic Information System (GIS) Award

2012bytheUSbased

environmentSystemsresearch

Institute (ESRI) at the ESRI International User Conference held

inUSA.Thisawardacknowledgesvision,

leadership,hardwork

and innovative use of GIS technology. We were also awarded

thenationalenvironmental


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excellenceAward2011bythe

National Forum for Environment & Health (NFEH) and the

BestCorporateSocialresponsibilityInitiative2011-2012Awardby nFeh andUnited nations environmentProgram.

During the year under review our subsidiary Ufone delivereda resilient performance as it continued with its customerfocused strategy resulting in a substantial revenue growth.

Italsokepttheoperatingcostundercontrolresultinginan

impressive bottom line. Focus remained firmly on data usersthrough introduction of innovative data services includinginternet access and mobile TV for Android devices. It is the only

cellularoperatorinthecountrytoofferBlackBerry

packages

at extremely affordable prices facilitating the users to access

BlackBerrymessenger,Facebook,Twitter,internet


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browsing,emailsandinstantmessaging.mobileinterbankfundtransfer

service offered by Ufone is the first step towards introduction

offull-fledgedmobileBankingServices,whicharecurrently

under process.

Ufone continued with its efforts to improve overall operational

efficiencycombinedwithnetworkmodernizationprojects.Amajorinitiativewas

thesuccessfulimplementationofaQualitymanagementSystem(QmS)resultinginUfone

Technical Department being declared ISO 9001:2008 certified.

Ufone became the first telecommunication company in

Pakistantojointheglobally


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acclaimedCImATrainingpartner

program with The Chartered Institute of Management

AccountantsUK.

With its futuristic vision our Group is constantly exploringemerging products and technologies in line with customersneeds and the fast evolving dynamics of the industry. Newinitiatives combined with our existing portfolio of diverse

products,agilenetworkandourfocuson

sustainedlong

term growth will further consolidate the Groups position asthe leading integrated telecom service provider in the region

ensuringthatPakistanremainsconnectedand

atparwith

the world class telecommunication services.

Iwouldliketoextendsincere

wordofthanksandappreciation

to our shareholders, representing both the Government of

Pakistan


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andemiratesTelecom(etisalat),fortheircontinued

and unabated support throughout this period. I stronglybelieve it is the support of the Board of Directors that hashelped the management perform and steer the Companyforward through these difficult times and resiliently face thechallenges leading to a successful financial turnaround.

Iwouldalsoliketothankallourcustomers

whosepatronage,

support and confidence in our services has encouragedus to strive harder to not only match their aspirations andexpectations but bring to them the experiences of the futuretoday.

Walid Irshaid



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18 18Directors' ReportPakistan Telecommunication Company LimitedOn behalf of the Board of Directors of

PakistanTelecommunicationCompany

Limited, we are pleased to present theAnnual Report of your Company and theaudited financial statements for the yearended june 30, 2012 together with auditorsreport thereon and a brief overview of theCompanys performance.

1. Industry OutlookDespite the global and domestic challenges ofrecessionary trends in economies of Euro zone andelsewhere as well as increasing fuel and commodityprices and impact of heavy rains in southern part of the

country,Pakistanseconomyshowedresiliencewith

estimated GDP growth of 3.7% in 2011-12 compared to3% in the previous year.

Competition in the telecom industry remained intenseresulting in decreasing average revenue per subscriber

(ArPU).Overalltele-densityinPakistanwas72.1%

(end May 2012) with 4% annual growth. Broadbandpenetration, however, witnessed 35% growth up to April2012 with wireless broadband increasing by 65% during

this period.

LatestfiguresreleasedbythePakistan


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Telecommunication Authority (PTA) indicate that the

Telecomsectorhadagoodyearintermsofmarket

penetration and may attract significant Foreign DirectInvestment through the auction of 3G licenses in

Pakistan.Also,3Gcantakebroadbandto

everynookand


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Annual Report 2012 Annual Report 2012corner of the country, becoming accessible to more than revenues from CorporateServices and International90 percent population, with relatively small effort. Incoming calls also witnessed increase compared to lastyear.GovernmentofPakistanisencouraginginnovationbypilotingtheuseofbranchlessbanking.PTAandministryof Information Technology are promoting and developing

a. ProfitabilityFor the year under review, PTCL Groups profit after taxtheemergingfieldofbranchlessandmobilebankinginwas Rs. 11.5 billion, 36% higher compared to the profitthe country with the aim of having two-fold benefits. achieved last year. PTCLs p

rofit of Rs. 7.2 billion was 3%Besidesprovidingbankingfacilitiestoalargesectionless than the previous years profit resulting in earningsof population, it would help in generating new business per share (EPS) of Rs. 1.41.opportunities

andsustainablerevenueforthebanksand telecom operators. PTA is also playing an important Keepinginviewthe


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imminentfundsrequirementstorole by encouraging its regulates to play their due part meet on-going VSS (Voluntary Separation Scheme)inprovisionofsmoothandefficientbranchlessbankingobligations as well as those on account of expansionservices.PTCLhasacquiredamicrofinancebankwhichand

diversificationinPTCLsnetworktokeepabreastofwillhelpPTCLGroupto

rolloutbranchlessbankingpost 3G scenario, the Board of Directors decided not tothroughout the country. recommend dividend for the year under review.PakistansBroadbandsubscribersbasehassignificantlyb. Revenues

increased and DSL remained the main technology used PTCL Group revenue at Rs. 110.8 billion for the yearto access broadband services in the country, alternative 2011-12 was 8% higher as compared to the previous year.wireless solutions WiMax and EV-DO are also catching PTCLs revenue for the year was Rs. 60 billion showingup fast. The popularity of mobile broadband services is an increase of 9% compared to last year revenue. Of this,due to quality of experience and service with lucrative revenue from Broadband segment showed a noteworthy


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pricing plans bundled with low cost devices. Moreover, growth of 58%. Revenue from Corporate Services andtwo-third of the population reside in rural areas where International Incoming calls also registered 12% andfixed line infrastructure remains low, therefore wireless 8% increase respectively compared to previous year.broadband service becomes an attractive and relatively Competitionfromcellularoperators,however,keptthecheaper method to bring connectivity to the underserved voice revenues slightlylower than last year.2.regions.Financial Performancec. Operating CostsInflation,devaluationofPakistanicurrency,

increasedDuring the year under review, Broadband, wireline as well prices of fuel and power, and salary increments wereas wireless, remained main contributor of growth for main factors to increase the overall operating expensesPTCL. With 43% increase in subscriber base of Broadband, by 7% compared to lastyear. The cost of services at Rs.corresponding revenues were higher by 58%. Besides, 44.9 billion increased by 7%. The administrative and

general expenses grew by 5% to Rs. 7.8 billion during the

year

underreview.Thesellingandmarketingexpenses

at Rs. 2.5 billion for the year under review increased by9% on account of diversification in sales and distributionchannels.

3.Products & ServicesDuring the year under review, your Company continued toprovide various voice and data communication productsand services based upon latest technology to a vast arrayof subscribers throughout the country meeting theirdiversified needs at competitive prices.

An overview of the main products and services offered byPTCL and related performance is provided in succeeding


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paragraphs.

a.BroadbandDSL Wireline

During the year under review, DSL customer baseincreased by 32% to 0.8 million subscribers spreadthroughout the country maintaining your Companys

dominanceintherelevantmarket.Thegrowthwas

primarily achieved by upgrade promotions, incentives for

newsubscribers,

andimprovedbundledpackages.

Amongvariouspackagesofferedduringtheyear,

double-Impactpackagewasaninitiativethatbundled

capped voice minutes and data services with special

focuson

affordability.PTCLalsoimproveditsdoubleupUnlimitedpackagesfacilitatingsubscribers


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with

unlimited On-Net NWD/local calls, unlimited DSLdownloads, free WI-FI modem, line rent waiver, mobilecalls at fixed rate and waiver on IPTV service charges.


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company LimitedAnotherproductintroducedwasJadooBox.This

smart device offered unlimited voice, DSL and EVO-Nitro bundled together. The device provides unlimitedconnectivity irrespective of power load shedding, coupledwith affordable bundled offers on easy payment plans.

A limited time offer for 1MB subscribers to upgrade to2MB speed at same rate was successful as many such

subscriberscontinuedwith2mB

packageaftertheexpiry

of the promotion. Students were further facilitatedthrough increase in voice minutes and waiver of line rent

onStudentBundlePackage

withanominalincrease

in the price. Further, Introduction of 4Mbps broadbandspeed with only 25% price increase as compared to 2Mbps speed prompted a sizeable number of existingsubscribers to upgrade to 4 Mbps.

duringthe

year,PTCLupgradedtheSmartIPTVservicethroughnetworkexpansions


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andcontentenrichment.Aggressivesalescampaignandpackagedevelopmentwerealsoundertaken.Asaresult,customerbaseofIPTVserviceincreasedby56%during

theyear.SmartIPTV

is now also being offered on 3G EVO Tab with rewindfeature.

expansionanddiversificationof

relevantnetworkelementsresultedinfacilitatingofferingofdSLpackages

up to 50 Mbps widening the choice for Broadband

customerstoselectthepackageaspertheirneeds.


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Further, FTTH (Fiber to the Home) technology wasintroduced with the launch of GPON (Gigabit Passive

Opticnetwork)servicesinselectedareastobeexpanded

to green field areas too. At the same time, DSL coverageto less developed and remote areas is provided under

USF(UniversalServiceFund)projects.

Asaresult,the

total installed DSL enabled lines reached 1.65 million

lines at end of june 2012. Also, a centralized monitoring

systemwasset-up

forbroadbandservicesmakingvisible

any broadband node outage in the real-time along withthe process of its restoration thus reducing down timeconsiderably.

EVO - 3G Wireless Broadband

Core philosophy of your Companys 3G EVO brand is toempower people with affordable wireless broadbandservice that further enriches the internet experience forits users. In a short span of time since its introduction,EVO has achieved rapid growth that led to introductionof innovative and futuristic products and services. Duringthe year, the subscriber base of 3G EVO witnessed agrowth of 90% with relevant revenue increase of 55 % overlast year.


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The year under review saw a range of new services andproducts introduced under the banner of 3G EVO. Launch

of3GeVOTab,a7Wi-Fitablet,poweredbybuiltin3G

EVO, for high speed internet-on-the-go connectivity,established PTCL as the pioneer in the country for 3Genabled Tablets. Another first by your Company wasEVODROID, a smart phone with built in 3G EVO capability.Next new product to be launched was Tenda 3G Wi-Firouter that supports 3G connectivity through plug-in of

any 3G EVO device.

Withtheaimtomake3GeVOserviceavailabletolower

incomebracketsalso,256Kbpspackageswereintroducedduringtheyear.3GeVOprepaid

packageswererevisedandconsolidatedandvolumebasedprepaidpackages


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were given five times more volume at same or nominaltariff increase, providing subscribers more value for theirmoney.

duringtheyear,regularpromotionsincludingkiosk

activities and brand activations at various public areassupported by trade shows were conducted to expand

3GeVOtolargerpartof

population.Customerwin-back

initiatives were introduced offering recharge incentivesfor inactive customers.

As part of customer service initiatives, new bill paymentmechanisms were introduced. These included billpayment through Easy Paisa and synergizing with Ufoneto provide Easy recharge to PTCLs EVO customersat all Ufone U-load retailers besides various in-house

rechargefacilities.PTCLalsopartneredwithBankAl-Falahofferingspecialbundled

discountedpackagesfor3GeVOtothebankscreditcard


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customers.

majornetworkexpansionmade3GeVOserviceavailableinallmajorareasnationwide,makingitPakistanslargestwirelesscoveragenetwork.PTCL

notonlyenhanceditsblanketcoveragebyexpandingBTSinfrastructurebutit

also introduced micro cells to fill the gap in the congestedareas. With concerted efforts, coverage of PTCL wirelessbroadband service EVO has been extended to 254 citiesand towns with the addition of 363 sites during the year.The EVO- enabled sites across the country now standat 1,409. PTCL is the first operator in the world to offerCDMA wireless technology supporting 3.1 Mbps to 9.3Mbps speed on commercial basis.

b. VoiceLandline

During the year under review, various initiatives were

undertakentoencourageenhancedusageoflandline


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with emphasis on new subscriber acquisition as well as


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limitedretention of existing subscriber base. These initiativesentailed incentives in the form of customized call plans,value added services and a vast range of affordable

packages.

For international outgoing traffic, rates with 30 secondbilling to 20 destinations world-wide facilitated the

subscriberstomakeinternationalcallsatmost

economical prices. Introduction of mobile call ratesallowed the subscribers to call from fixed line to any

mobilenetworkinPakistanondiscountedrates.revisioninthePakistan-PlusPackage

offeredfreenWdminutes

and conference call facility at a nominal fixed monthlycharge.

Special promotions and offers were developed for

ramadan,hajj,

Christmas,eidandnewYearincluding

provision of free telephone sets for new connections inthe holy month of Ramadan.


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V-fone

During the year under review, Vfone subscribers at

CdmAwirelessnetworkwereofferedvariouspackageswithflexibletariffs.Thesepackagesincludednon-Stoppackagewithoneofthe

loweston-netcallingratesalong

with very competitive off-net tariffs. PTCL Vfone Smart

Packageofferedonesimple

ratefordialingnationwide.

Special promotions announced during the year includedGrand V-charge Offer, Special Islamic Portal, Vfone

Ramzan Offer, Vfone Azadi Offer, Vfone Double Balance

Offer,line

rentreductiononunlimitedpackage,removal

of call set-up charges, Vfone Summer Offer and Vfone


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doubleBalancereconnectkeepingthesubscribers

constantly engaged.

Uload service was introduced for PTCL wireless customersin collaboration with Ufone. As a result, PTCL Vfone andEVO customers can now reload their accounts from morethan 120,000 Uload retailers nationwide.

c.Carrier & Wholesale ServicesPTCL Carrier & Wholesale plays a vibrant role in ICT(Information and Communication Technologies)


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Annual Report 2012 Annual Report 2012landscapeofPakistanbyprovidinginterconnection,

leased lines and traffic routing services usingvarious technologies including VSAT based satellitecommunication to other telecom operators in thecountry.

As part of diversification, interconnects are beingtransformed from TDM (Time Division Multiplexing) toIP (Internet Protocol) which helps to leverage PTCLs

nGn(newGenerationnetwork)and

IPinfrastructure

in providing the interconnect services. Further, neweravenues of distributed IP Bandwidth and white labelWLL Services proved successful.

Being cognizant of envisaged enhanced bandwidthrequirements post 3G auction in the country and toreap the benefits of this opportunity, PTCL is boosting

its

backhaulingcapabilitiesthroughnationalFiberBTSBackhaulproject.Towardsthisend,yourCompany

hasalreadydeployedafiberbackhaulsolutionforUfoneBTS


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sitesin10majorcitiesresolvingtheexistingdrSbandwidthchokingissuesthusresultinginincreased

revenues. Efforts are underway to emulate this solutionfor other cellular operators as well.

d. International BusinessBasedupon

itsrobustnetworkcapabilities,PTCL

continued to maintain its dominant leadership positionas being the preferred LDI (Long Distance International)

carrierservingPakistan

aswellasneighboringcountries

for international traffic and media provisioning.

As a result, International inward traffic terminating in

Pakistanwitnessed

recordgrowthduringtheyearunder

review resulting in 8% increase in respective revenuesover last year despite declining settlement rates. Further,


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international transit traffic to and from neighboring thus offering unmatched quality of service to itscountries also increased significantly. Moreover, strategic diversified customerbase ranging from retail consumersopticalfiberlinksenabledinterfacingofhighvaluedatatocorporatecustomersaswellasothernetworkcircuits commissioned with these neighboring countries. operators.

To cater for enhanced bandwidth requirements on e. Corporate Servicesaccount of increased volumes, additional IP bandwidth During the year under review, your Company continuedwas procured through successful negotiation of leasing to offer state-of-the-artproducts and services athigher capacities at lower rates. The said procurement affordable prices to theenterprise segment to meet theirof additional IP bandwidth was spread over all three diversified requirements. As a result, besides retainingsubmarine cables viz. I-ME-WE, SEA-ME-WE 3 and SEA-the existing customer base, various new customersME-WE 4 in all of which PTCL holds equity investment. from private and public sectors were added to PTCLs

It is worth mentioning that your Company is the only corporate customer portfolio. The sustained efforts intelecomoperatorinPakistanwhichhasanetworkofthis regard increased revenue from this segment by 12%three redundant and resilient submarine cable systems over the previous year.


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limited24The services offered to the corporate segments mainlycomprised of Managed Services, IP Surveillance, DataCenter Hosting, Web Hosting and MPLS (Multi ProtocolLabel Switching). Leading carriers around the world also

joinedhandswithPTCLinofferinginternationalmPLS

to meet regional and international requirements of ourvalued enterprise customers.

The year under review also witnessed enhanced focuson SME (Small and Medium Enterprise) sector offering

sizeable growth potential. For this sector, customized

BusinessinaBoxisanattractiveproductwhichisa

small gateway device that provides Broadband internetconnection sharing, Firewall security, VPN connectivity, IPtelephony, IP Camera Surveillance audio/video streamingand wireless LAN connectivity through a single line.

To extend the reach of Corporate Broadband servicesto far-flung areas, 170 DVB-S2 based VSATs have been

installedthroughoutPakistan,

outofwhich100such

connections were installed during the period underreview.


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PTCL also deployed an exclusive services monitoringplatform for its Corporate customers with centralizedfault monitoring capabilities which will help to servecorporate customers more efficiently.

4.Support FunctionsIn order to ensure that your Company continues toachieve sustained growth in its business of providingvarious voice and data products and services basedupon latest technologies, it is imperative that supportfunctions not only comprise of best available human

and technical resources but their performance remainat optimum level through use of excellent businesspractices and procedures.

The succeeding paragraphs summarize performance ofvarious support functions during the year under review.

a.Network InfrastructureBesidesaugmenting

thenetworkelementsspecific

to various product segments as detailed in precedingparagraphs, particular attention was placed during

theyeartooverhaul

andupgradetheAccessnetworkthroughoutthecountrybyundertakingnetworkrehabilitationCampaign.

Thesoleobjectiveofthe

campaign was to improve quality of delivered service tomeet desired levels of customer satisfaction.


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As a result of the continued efforts in this regard, two

millioncopperlinesinexistingnetworkweresuccessfully

made Broadband Enabled under the initiative named

rehabilitationofCoppernetwork.Withimprovedquality,

these lines are now capable to deliver higher bandwidth

over longer distances thus helping enhanced DSL

broadbandpenetration.Thisprojectnotonlyhelpedto

reduce customer complaints but was also instrumental

in clearing pending DSL broadband installation inrehabilitated areas.

Toensurenetworkavailabilityinthecountryduring

long hours of commercial power load shedding, detailedinspection of power plants and air-conditioning systems

at6,000sitesacrossthePTCLnetwork


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wascarried

out. Accordingly, preventive / corrective maintenance

activitiesasandwhenneededwereundertakenthus

ensuring availability of fuel for DG sets, optimizing battery

backupandstreamliningmanpowersupport.As

aresult,theavailabilitytimeofnetworkincreasedconsiderably.


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Annual Report 2012 Annual Report 2012To support the growth in bandwidth requirements,

country-wideTransmissionnetworkwascontinuouslyupgraded.Withadditionof2,250Kmopticalfiberduringtheyear,thetotalfiberdeployed

inPTCLnetworkincludingbackbone,long-haul,subsidiary,metroandOFAn network,reachedmorethan

31,300Km.

In geographically difficult areas, IP based Digital Radio

SystemsandVSATnetworkswerefurtheraugmented

to meet increasing requirements of residential andcorporate customers as well as other telecom operators.

b.Information TechnologyDuring the year, IP based solution for contact centers(IPCC) to manage customer complaints more efficientlywas


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deployedinallthelocations.Likewise,applicationof Customer Relationship Management (CRM) providing360. view of relations with individual customers wasalso implemented across the country covering alloperational regions with the focus of ensuring deliveryof quality service to our esteemed customers across theboard. The CRM is integrated with IPCC thus enablinginstant recording and timely rectification of faults to thesatisfaction of subscribers. Similarly, consolidation ofvarious customers interaction points for Corporate andWireless segments is also in progress.

The strength of your Company in information technology(IT) was instrumental in speedier launch of various

newpackages,promotions

andservicesinlinewiththecommercialneeds.Besides,applicationslikeSmS

updates for customers complaints; on-line real-time

updateofbillcollectionoverbankscounter;automated

service provisioning and billing for corporate customers;

workflowforchangingfaultydSLports;VmS(Voice


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Messaging Services) platform facilitating launch of VMSservices with automated solution and IPTV restoration In order to safeguard theinformation technologyservices were successfully developed and implemented. infrastructure against security threats, various initiativesAlso, billing cycle process was further reduced to facilitate weretakenduringtheyear.Qualyssecurityguardearlier delivery of bills to our customers. appliance was deployed to audit current security postureand to remove the gaps which may compromise accessMoreover, functionalities of the ERP (Enterprise Resource to business systems. Security Incident and EventPlanning) system based upon SAP were further improved management(SIem)systemand

networkconfigurationthrough development of in-house processes and reports auditing system were implemented to secure againstto cater to the business needs. An example in this externalattacks.YourCompanyalsoestablishedtheregard is the Transfer and Posting (TP) module providing SecurityOperations

Center(SOC)utilizingSIem,Qualysvisibility over all the staff postings in the organization. andnetworkAuditorsystemstomonitorsecurityDisaster recovery site for ERP modules was developed alerts and policy violation

s in real-time environment.and tested to ensure business continuity. Accordingly, PTCL is the first telecomorganization inPakistantohavededicatedITsecuritysetup.


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25


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limitedc. Human Resource DevelopmentDuring the year under review, performance basedevaluation of employees was continued thus

strengtheningthecultureoflinkingcompensationwith

performance. Towards this end, extensive training wasimparted to employees to evaluate the performance in

objectivemanner.

Online

JobdescriptionsandKPIs(KeyPerformance

Indicators) were made available to the managementemployees which helped them to perform better throughincreased understanding of their own responsibilities aswell as those of their subordinates.

SkillassessmentofCorporatesalesstaffwascarriedout

identifying the areas of improvement thus equipping the

concernedstaffwithlatestavailableskillsetstocarry


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out their responsibilities effectively. Similarly, trainingneed analysis of OSS (One Stop Shop) staff was also

undertakentoimproveservicedelivery.

An Annual Training Calendar for management staff wasintroduced which facilitated comprehensive training

programsnotonlytoenhanceskillsetsbutalsoto

create

awareness of the challenges and opportunities in the

business.Fornon-managementstaff,softskillstrainingprograms

wereundertakentoimprovethebehavior

thus enriching relationships with internal and externalcustomers.

Commercial function and allied responsibilities

werethoroughlyrestructuredwiththeobjectiveto

facilitate service delivery to the customers by regional


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management as their prime responsibility.

To further improve and streamline the processes as pertodays business realities, the new HR Policies Manualwas approved by the Board and is being implementedthroughout the organization.

A Succession Planning Exercise was completed to identify

potentialsuccessorstokeymanagementpositions.

For the identified successors, development plans on

individualbasisarebeingundertaken.

Also,PTCLshajjSchemecontinuedtobereceivedwell

by employees whereby top 10% performers were given

thechancetobeselectedtoperformhajjatCompanysexpenses

throughanobjectiveballotingsystem.

The sustained efforts to improve quality of its human


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Annual Report 2012 Annual Report 2012resource resulted in PTCL being declared winner ofthe prestigious 2nd Global HR Excellence Award 2011

profferedbyGlobalmediaLinksandBusinessmilestonesofPakistan.

Recently, your Company announced the second VSS(Voluntary Separation Scheme) after the first oneimplemented in 2008. The current VSS is being offeredto selected categories of mostly non-managementemployees.

d.

Market CommunicationDuring the year, PTCL maintained noteworthy presencein both electronic and print media promoting andcreating awareness about the brands and its productsand services at competitive rates. There was 30%increase of PTCLs presence in electronic media whereasbrand activation initiatives increased by almost 100%. Asa result, a dynamic corporate image of your Company isconstantly portrayed.

Efforts are underway to leverage popular social/digitalmedia platforms for proactive engagement with targetaudiences and to enhance the content quality of your

Companyspublicwebsite(www.ptcl.com.pk)and

internal web portal, InfoShip.

For the third consecutive year, PTCL was rated amongthe top two companies in the print and electronic mediaby Aurora, a Dawn Media Group Publication on Ideas and

marketingApproaches,basedondataprovidedbyGallup,Pakistan.


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e.Customer CareDuring the year, customer facilitation was furtherimproved by simplifying customer related processes with

easy access provided to customers at all touch points i.e.

Web,Walk-inchannels,Phone-inchannelsandKnock-in

channels.

As a result of concentrated efforts involving all the

stakeholders,provisioning

timewasimprovedby50%for

PSTN and Broadband services. A performance evaluationand appreciation program viz. Region of the Month wasintroduced based upon a Customer Care Score Card

taking

intoaccountrelatedKPIsregularlypublishedon

monthly basis.

Flagship One Stop Shops (OSS) are being upgraded as

modelSalesandCustomerCareCentersinmajorcities


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across the country. This will result in better visibility,

improvedfacilities,servicequalitybenchmarksand

standardized layouts. Initially nineteen (19) locationsare selected nationwide. Pilot run was successfullycompleted in Islamabad. Extensive training is being

impartedtoallOSSstaff,withaccesstoKBS

(KnowledgeBasedSystem),installedQ-maticmachinesandI-Sentry

solutions (at selected locations) that has improved OSScustomer experience many fold.

CRM (Customer Relationship Management) solution wassuccessfully launched in all regions countrywide, furtherenabling your Company to meet the customer demandsmore effectively.

PTCLhasdevelopedcustomerfeedbackchannels

through which customers are contacted to capture their

experiencewithPTCLonregularbasisunderVoice


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ofCustomerinitiative.Theactivityhelpedtoretaincustomersthrougheffectivewin-backinitiatives.

duringtheyear,variousbankswereengagedtoprovide

on-linereal-timeupdatesofbillcollectionoverbank

counters. The initiative will be instrumental in instant

restoration of phones disconnected because of nonpayment.The arrangement is in addition to alreadyavailable channels of OSS and PCPM (Public CashPayment Machines) in this regard.

Contact Centers

PTCLs Contact Centers continued to provide a range ofservices to customers through inbound and outboundcalls. During the year under review, Siebel-based CRMand IPCC technologies were introduced to play the pivotalrole in enhancing customer facilitation and retentionthrough a single technology platform.

Customer communication focused initiatives includedSMS Complaint Registration Service that empowered thecustomers to lodge complaints through SMS, intimationof monthly invoice/bills through E-Billing (Email) andSMS service. Dedicated team of outbound agents isupdating the customer database while also addingnew information such as email addresses and mobile

numbers.


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AlsoimportantisWeeklyChurnSurveyof

Broadband and IPTV services with focus on customerretention and churn management of opt out customers.

Contact Center service provisioning teams aggressivelyfollowed up with regions to ensure timely provision ofservices to the customers. These efforts bore positivetrend in service provisioning time.

Telemarketingagentsregularlyreachouttopotential

customers inviting them to experience host ofcommunication services offered by your Company.Constant training is imparted to contact center agentsto ensure that customer experience at Contact Centersremains pleasant.


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Pakistan Telecommunication Company Limited28Pakistan Telecommunication Company Limited28


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Annual Report 2012 Annual Report 2012f. Regulatory AffairsDevelopment) Fund from 1% of applicable revenues to0.5% - in line with the rate applicable to mobile operators.Besides continuing to implement already-obtained Accordingly, the required amendment in PTCLs licensecontracts under Universal Service Fund (USF) scheme of wassignedwithPTA(PakistanTelecommunicationGovernmentofPakistan(GoP),PTCLwontwomoresuchAuthority) with retrospective effect from june 2005, theprojects

duringtheyear.Firstrelatestobasictelephonylicense effective date.provisioning in un-served and under-served areas ofmastung,noshkiand

ZiaratdistrictsofBaluchistanPTA carried out the second nationwide Broadbandwhereas the second encompasses broadband services in QualityofServicesurveyofallwirelessand

wirelineSukkurTelecom region.service providers throughout the country and placedPTCL in category-A at Lahore, Rawalpindi, Islamabad,Based upon presentations made by your Company, PeshawarandQuetta.PTCL


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alsosucceededinresolvingGovernmentofPakistan(GoP)reducedtheratethe issues with PTA for commencement of businessof mandatory contribution to R&D (Research and inAJK&GBregionbycompletingalltherequirementsincluding roll out obligations.

Besides, various legal cases pertaining to title of landsowned by PTCL as well as PTAs determinations regardingquality of service, numbering charges and PTCLspackageswereeffectivelypursuedduringtheyear.g. Quality AssuranceDuring the year, three more PTCL sites relating to customercare were ISO certified after detailed compliance audit by

the certification body. Surveillance audit of certain siteswhich achieved ISO certification in prior years was alsoconducted by the certification body and, as a result, theISO certification was allowed to be continued.Your Company strives to ensure continuous deliveryof quality services to its customers. Towards this end,all the facets involved in provisioning of products andservicesarethoroughlycheckedforquality

aspects.Keyperformanceindicators(KPIs)relatingtooperationsofall


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networkelements,beitAccessnetwork,SwitchingnetworkorTransmissionnetwork,areconstantlyreviewed and improved. As a result of the continuousvigilance, two million copper lines were made broadband-enabled during the year thus increasing the capacity usinginternal resources. Similarly, all the processes involvedin implementation and operation of newly-introducedapplication of Customer Relationship Management (CRM)to further facilitate the provisioning and fault rectificationin an efficient manner were thoroughly reviewed tocomply with respective standards before its launch.h. ProcurementWith the transition from voice-centric to data-oriented

products and services as well as reducing prices in thewakeofcompetition,PTCLsuccessfullymetthechallengein a cost-effective manner through timely diversification29


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limitedinthenetworkelementsandmakingtheproductsand

services based upon latest technology readily availableto its customers at affordable prices.

For this purpose, your Company has developed anefficient structure encompassing all the operational

areasthroughoutthecountry.

majorelementsof

this structure are stores located in all the regions,establishment of data-bases comprising of information

relatingtolatestnetworkand

productsandautomated

processes facilitating timely availability of requiredinputs in line with the commercial and operationalrequirements. Further, synergies have been developed

withothergroupcompanies

tokeepabreastofthelatesttrendsandaccordinglymaking


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procurementatoptimum

costs.

i.SynergyWith the aim to continuously reduce the costs and

achievehigherrevenues,yourCompanyhasembarked

on initiatives with its subsidiaries and other groupcompanies. Through these initiatives, resources arecombined where feasible, examples of which are co-

locations,jointcontactcenters,sharedprocurement

policies, technological standardization and training andsecondment of human resources. Once the envisaged3G auction process is completed by the Government,PTCL intends to further strengthen synergy initiativesamong group companies especially in the areas covering

backhaulingandtransmissionnetworksusingPTCLs

potency in this regard.

5.Corporate Social Responsibility

To uphold the high standards of corporate ethics andvalues of social responsibility, the Corporate SocialResponsibility (CSR) Policy of PTCL focuses on areasof education, health, environment, employee welfare

and special needs. In accordance with the CSR policy,

numerousprojectswere


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undertakenduringtheyear

detailed in succeeding paragraphs.

To provide help to victims of 2011 devastating floods, adonation of Rs. 50 million was made by PTCL Group inPrime Minister Flood Relief Fund. For this purpose, the

chequeswerepresentedtothePresidentofPakistan

by CEOs of PTCL and Ufone. Further, medicines worthRs. 3.1 million were provided to flood affectees in Sind

through the medical camps established by PTCL.

Your Companys Mobile Medical Units routinely visitthe countrys rural areas where no proper medical

facilitiesareavailable.Theobjectiveofthesevisits

isto

provide general OPD facilities and medical assistancenot only to PTCL employees and their families but alsoto the local communities at large. Also, PTCL providedmedical equipment worth Rs. 9.7 million to the Federal


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Annual Report 2012 Annual Report 2012General Hospital located in suburbs of Islamabad. A

blooddonationcampaignincollaborationwithPakistan

Red Crescent Society and jamila Sultana Foundation(affiliated with Thalassemia International Federation)was also conducted to support thalassemia patients.

Anassistanceofrs.2.3millionwas

extendedtoPakistanBait-ul-maalsnationwidePakistanSweethomesprojectthatprovidesqualityhousing

andeducationtonearly3,000orphanedchildrenacrossPakistan.

PTCL commemorated the international WorldEnvironment Day 2012, Green Economy: Does it include

YOU? by creatively engaging its employees and their

familieswiththemessage,everydropisprecious.


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Treatwaterwithrespect.YourCompanyorganizedagrandnationwideenergyConservationPaintingCompetition

and Exhibition for employees and their families. Morethan 500 paintings from all over the country werereceived from employees and their families, which wereexhibited in the Company Headquarters through a seriesof colorful mega events and prize distribution ceremoniesattended by national celebrities and the media.

Your Company participated in the Government of

Pakistanstreeplantationcampaignbyplantingmore

than 300 saplings in PTCL offices and residentialcolonies. Significant efforts have been made to reducethe Companys carbon footprints. By encouraging a

paperlessworkenvironment,itisaimedtoreducethe

adverse effects of greenhouse gases on the planet.

PTCLisoneofthefewcompaniesinPakistan


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toswitchfromusingsimplepainttoLed-freepaint,thusmaking

its buildings environment-friendly. Your Company hasinstalled solar panels at its Headquarters, which arepowering its outdoor lighting through solar energy.

TheCompanyrecentlylaunchedaclean

drinkingwaterproject,installing41filtrationplantsforcommunity

welfare.

PTCLisnowworkingonalignment,integrationand

compliance of its sustainability and social investmentpolicy and agenda with the global sustainability reportingstandards of UN Global Compact, Global Reporting

Initiative, and ISO 26000 2012-2013.

6.Awards and AchievementsDuring the year under review, your Company wasbestowed with several national and international awardsand honors, which are stated here:

declared


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theleadingoperatorinPakistanbyPakistanTelecommunicationAuthoritys2011QualityofServicesurvey for providing the highest quality BroadbandInternet service to consumers.

WontheprestigiousinternationalSAmenAAward

2011forbeingtheBestTelecomOperatorinSouthAsia.Wonthe

2012ConsumerChoiceAwardastheBestWirelessBroadbandInternetserviceprovider.

WonthenationalenvironmentalexcellenceAward2011bythenational


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Forumforenvironment&health(NFEH).

WontheBestCorporateSocialresponsibilityInitiative2011-2012AwardbynFehandUnitednationsEnvironment Program.

WontheprestigiouseSrISpecialAchievementinGISAward2012byU.S.-based

environmentSystemsResearch Institute (ESRI) for outstanding achievementsand organizational performance in GIS and programs.


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company LimitedWonthe10thTeradatanationalITexcellenceAwardfor3G eVOWirelessBroadbandInternetproject.PTCL3GeVOWirelessBroadband

declaredthehighestratedprojectfor2012mBA(executive)studiesbytheprestigious Lahore University of Management Sciences

(LUMS).

PTCLwontheprestigious2ndGlobalhrexcellenceAward2011.

7.SubsidiariesPak Telecom Mobile Limited Ufone

Againstthebackdropofuncertainbusiness


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environment,

acute shortage of commercial power, soaring fuel andenergy prices and security situation in the country,performance of Ufone in terms of revenue enhancementand cost reduction resulting in improved marginsremained above par.

Continued focus on Voice, data and innovative VASservices contributed to revenue growth. Ufone, beingone of the most proactive operators in the industry,

offeredtheShahCarpromowhichwasreplicatedby

the competition. The promo was a roaring success in

terms of both subscriber acquisition as well as revenueenhancement.

Existing VAS portfolio was expanded with the new

andinnovativeofferslikeUmonitorthroughwhich

customers/organizations can monitor calls of their

officialnumbersandSmSBackupService.Inthewake

of 3G, Ufone attracted data users via offering innovative

productssuchasSpecialdailyInternetPackage,


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UfoneAppStoreand mobileTVforAndroiddevices.

UfoneistheonlyoperatorinPakistantoofferBlackBerrypackagesatmostcompetitive

pricestoitsvaluedcustomersintheformofBlackBerrySocialandComplete

whichprovidesunlimitedBBm,Facebook,

Twitter, internet browsing, integrated email address andinstant messaging.

UnderVAS

portfolio,BISPPhase2andmobileinterbankfundtransferservice


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Upaymentswerelaunched.This

helped Ufone to prepare and get ready for full-fledged

mobileBankingServiceswhichareintheoffing.

majorsalesmomentumwasachievedthroughdeveloping

reseller segments by identifying lucrative and untapped

pockets,strengthenedbylocalizedengagementplans

resulting in substantial gross subscriber additions. Pointof Sale extensions were also created in areas whichattract high consumer traffic to serve the customer at

his preferred location.

Focusing on the device strategy, Ufone successfullylaunched both high and medium end handsets such asGalaxy SII, HTC Salsa, HTC One V and Horizon (Android).Along with the Android handsets, Ufone also launched

BlackBerryCurve9380andforthe

firsttimeinPakistanBlackBerryBold9790.Thishasenabled


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Ufonetoenhance

customer loyalty and attract high value customers to theUfone family.

Ufone continued its efforts in improving overall operational

efficiencycombinedwithnetworkmodernizationprojects.TheseincludedcompletemodernizationofBTS

infrastructure, redesign and optimization of existing

transmissionnetworkinmajorcitiesforimprovedreliabilityandperformanceand

up-gradationofpacket

corenetwork,prepaidchargingplatforms,mSCsandhLrs.

UfonesuccessfullyimplementedtheQualitymanagementSystem(QmS)whichwas


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dulyaudited

against the ISO standard and resultantly, the Technicaldepartment was declared ISO certified. On cost efficiencyfront, initiative of tower sharing was continued andresulted in substantial savings of operational costs andcapital expenditure.

Takingastepfurthertodevelopitsstaffinto

strategic business managers, Ufone became the first

telecommunication

companyinPakistantojointhe

globally acclaimed CIMA Training partner program withThe Chartered Institute of Management Accountants,

UK.The

UfoneWaydrivewassuccessfullycompleted

during the year which articulated desired behaviors for allpeople interacting with external and internal customers,

potentialemployees

andstakeholders.

Ufone has always been a socially responsibleorganization and during the year it participated in a


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limitednumber of initiatives for the betterment of people and theenvironment. Ufone partnered in setting up ThalassemiaCentre at the District Headquarters Hospital in Vehari.

helpinginexpansionoftheKidneyCenterinKarachi

was yet another effort to benefit more than 500 patientsresulting in 83,884 dialysis sessions annually.

Ufone is helping to promote various green initiatives

with

reducedcarbonfootprintsthatcontributeinmaking

the planet more environmentally sustainable. Focusingmainly on educational institutes and hospitals, Ufonehas conducted various plantation activities to promotethe importance of a healthy green environment.

Ufone recently hosted Iftar and Eid celebrations at SOS

childrensvillagesinIslamabadandQuettatohelpmake

the under-privileged children part of the celebrationsassociated with Ramadan and Eid ul Fitr. These activitiesare part of wide ranging CSR activities carried out byUfone for the under-privileged segments of society.

Rozgar Microfinance Bank

Your Company finalized the arrangements includingregulatory compliances to acquire 100% ownership of


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rozgarmicrofinanceBankLimited.Theacquisitionisin

line with PTCL Groups initiative on Digital-Commerce.The initiative includes offering digital payments and

bankingsolutions.

Branchlessbankingbringsabouquetof

financialservices

to consumers on the go. The services include P-P (personto person) Money transfer, mobile wallets, cash-in cash-out, bill payments, G-P (government to person) payments,merchant/retail payments, loan disbursement, loanrepayment and more.

Branchlessbanking

isusedtosubstantiallyincreasethefinancialservicesoutreachtothemassunbanked

communities. It represents a significantly cheaper

alternativetoconventionalbranch-basedbanking


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that allows financial institutions and other commercial

sectorstoofferfinancialservicesoutsidetraditionalbankpremisesbyusingdeliverychannelslikeretailagents,

mobile phones etc.

Acquisition

ofrozgarmicrofinanceBankisaneconomic

and cost effective regulatory compliance for PTCL Groupto realize the benefits of opportunities being offered by

branchless

banking.

8 . Financial Reporting Frame WorkThe Company has complied with all the materialrequirements of the Code of Corporate Governance and

Directors are pleased to confirm the following:

Thefinancialinformation

preparedbythemanagementof the Company present fairly its state of affairs, theresults of its operations, its cash flows and its changes inequity.

Proper


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booksofaccountsoftheCompanyhavebeenmaintained.

Appropriateaccountingpolicieshavebeenconsistentlyapplied in the preparation of financial information andaccounting estimates are based on reasonable andprudentjudgment.

InternationalAccountingStandards,asapplicableinPakistan,havebeenfollowedinthepreparation

of


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Annual Report 2012 Annual Report 2012financial information and if any departure there from, thesame has been adequately disclosed.

Thesystemofinternalcontrolissoundindesignandhasbeen effectively implemented and monitored.

Therearenosignificant

doubtsabouttheCompanysability to continue as a going concern.

Therehasbeennomaterialdeparture

fromthebestpractices of corporate governance, as detailed in listedregulations.

TheAuditCommitteehasrecommendedthe

appointmentof M/s A. F. Ferguson & Co., Chartered Accountants asauditors of the Company for the financial year endingjune 30, 2013.

Informationregardingoutstandingtaxes


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andleviesisgiven in notes to the accounts of the financial information.

TheauditedvalueofPensionAssetsasperauditedaccounts amounted to Rs. 60.2 billion at june 30th, 2012(2011: 56.5 billion).

duringtheyear,atraining

programforcertificationofaDirector has been arranged.

historicbusinessindicators,compositionof

AuditCommittee, Human Resource & Remuneration (HR&R)Committee, number of Board Meetings, attendance ofDirectors and Shareholding Pattern are part of this reportand appear in the following pages.

9.Challenges and Way ForwardPTCListheonlyunified

serviceproviderinPakistan,

able to serve all the customer segments includingconsumers, small and medium enterprises, corporates,multinationals and other telcos with a comprehensiveportfolio of products, with committed service levels and


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a seamless quality of experience for all the segments.

PTCL understands the transformation of global telecomsector from Minutes to Bytes. PTAs plans to issuelicenses for third-generation (3G) mobile telecomservices bring in a challenge and an opportunity forPTCL. To cater to the need of time, PTCL have investedheavily in infrastructure and technology sector and is in

theprocessoftransformingitsmicrowavebackhaulto

IP technology to meet high bandwidth requirements of

3G/4Gnetworks.

PTCL is well positioned to provide highest quality ofinnovative services with a new customer servicesinterface in more enthusiastic manner. PTCL hasambitious plans with full stream and strength ofexpanding and consolidating both the wireline and

wirelessBroadbandservicesacrossPakistan.Today,

PTCLBroadbandnetworkisunmatchedinitssize,

capacity and footprints.

Pakistan

isoneofthefastestdevelopingmarketsforbranchlessbanking


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intheworld.Avarietyofbusiness

models is emerging that involves a wide range of players,

includingmobilenetworkoperators(mnOs),technologypartnersandotherassociatedbusinesses.Bankswant

to

add mobile channel to their existing options for payment.PTCL and its subsidiary, Ufone are ready to grab thisopportunity by providing communication infrastructure

thatintegratesbanking,telecomoperators,consumers

andagentsinacohesivenetworkwiththegoalof

providinguniform

bankingservicesacrossthespectrum.

Product Bundles offer a real opportunity for PTCL notonly for retention but for customers acquisition byup selling and cross selling. PTCL is becoming more


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customer focused in developing and offering attractivebundles catering to various segments.

10. AcknowledgementsTheBoardofdirectorsoftheCompanywouldliketothankallourcustomers,suppliers,contractors,serviceproviders,stakeholdersand

shareholdersfortheircontinued support.

Wewouldalsoliketoappreciatethehard

work,diligence

and dedicated efforts of our employees across thecountry which enabled the Company to successfullyface the challenges of a highly competitive operating

environment.Wewouldalsolike

toexpressourspecialthankstotheGovernmentofPakistan


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andetisalat

Group for their continued support and encouragement

instrivingtoachievetheobjectiveofenhancing

shareholders value.

On behalf of the Board of Directors

Amir Tariq Zaman KhanWalid Irshaid

Chairman PTCL Board President & Chief Executive OfficerIslamabad: September 11, 2012


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ChairmanSerkanOkandanMembersAbdulrahim A. Al NooryaniKamranAlimohamedZuhairSecretaryFarahQamarAttendance of PTCL Board MembersTotal 06 Meetings of the Audit Committee were held duringthe financial Year.S # Name of Board Member Meetings Attended1. Abdulaziz H. Taryam 062. Abdulrahim A. Al Nooryani 063. Dr. Syed Ismail Shah 05Functions of Audit CommitteeAssist the Board of Directors in approving the Companysfinancial statements, appointment of External Auditor,reviews scope of internal control, monitors statutorycompliances determines the appropriate measures tosafeguard the Companys assets and recommends placement& borrowing of funds. It ensures the coordination betweenthe internal and external auditors of the Company.ChairmanAbdulrahim A. Al NooryaniMembersFadhil Al-Ansari

KamranAliJamilA.KhanSerkanOkandanDr. Daniel RitzSecretaryFarahQamarAttendance of PTCL Board MembersTotal 04 Meetings of the HR&R Committee were held duringthe financial Year.S # Name of Board Member Meetings Attended1. Abdulrahim A. Al Nooryani 042. Abdulaziz A. Al Sawaleh 043. Fadhil Al Ansari 044. Abdulaziz H. Taryam 045. Dr. Syed Ismail Shah 03Functions of Human Resource CommitteeReviews and recommends development and maintenance

of long term HR Policies, an effective employee developmentprograms, appropriate compensation and benefit plans andgood governance model in line with statutory requirementsand best practices of the Code of Corporate Governance. Itensures that the Governance and HR Policies & proceduresarealignedwiththestrategicvisionandcoreobjectivesofthe Company. It provides leadership and guidance for theorganizational transformation needed in achieving Companyscorporateobjectives.Total 06 Board meetings were held during the financialyear.S # Name of Board Member Meetings Attended1. SaeedAhmadKhan 03Chairman PTCL Board

FarooqAhmedKhan 03Chairman PTCL BoardAppointed during the year2. Abdulrahim A. Al Nooryani 063. dr.Waqar masoodKhan 03AbdulWajid rana 03Appointed during the year4. JamilAhmedKhan 045. Abdulaziz A. Al Sawaleh 066. Fadhil Al Ansari 067. Dr. Syed Ismail Shah 05KamranAli 01Appointed during the year8. Abdulaziz H. Taryam 069. Dr. Ahmed Al jarwan 06


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Composition ofAudit CommitteeComposition of HumanResource CommitteeAttendance ofPTCL Board MembersPakistan Telecommunication Company LimitedChairmanSerkanOkandanMembersAbdulrahim A. Al NooryaniKamranAlimohamedZuhairSecretaryFarahQamarAttendance of PTCL Board MembersTotal 06 Meetings of the Audit Committee were held duringthe financial Year.S # Name of Board Member Meetings Attended1. Abdulaziz H. Taryam 062. Abdulrahim A. Al Nooryani 063. Dr. Syed Ismail Shah 05Functions of Audit CommitteeAssist the Board of Directors in approving the Companysfinancial statements, appointment of External Auditor,reviews scope of internal control, monitors statutorycompliances determines the appropriate measures tosafeguard the Companys assets and recommends placement& borrowing of funds. It ensures the coordination betweenthe internal and external auditors of the Company.

ChairmanAbdulrahim A. Al NooryaniMembersFadhil Al-AnsariKamranAliJamilA.KhanSerkanOkandanDr. Daniel RitzSecretaryFarahQamarAttendance of PTCL Board MembersTotal 04 Meetings of the HR&R Committee were held duringthe financial Year.S # Name of Board Member Meetings Attended1. Abdulrahim A. Al Nooryani 042. Abdulaziz A. Al Sawaleh 043. Fadhil Al Ansari 04

4. Abdulaziz H. Taryam 045. Dr. Syed Ismail Shah 03Functions of Human Resource CommitteeReviews and recommends development and maintenanceof long term HR Policies, an effective employee developmentprograms, appropriate compensation and benefit plans andgood governance model in line with statutory requirementsand best practices of the Code of Corporate Governance. Itensures that the Governance and HR Policies & proceduresarealignedwiththestrategicvisionandcoreobjectivesofthe Company. It provides leadership and guidance for theorganizational transformation needed in achieving Companyscorporateobjectives.

Total 06 Board meetings were held during the financialyear.S # Name of Board Member Meetings Attended1. SaeedAhmadKhan 03Chairman PTCL BoardFarooqAhmedKhan 03Chairman PTCL BoardAppointed during the year2. Abdulrahim A. Al Nooryani 063. dr.Waqar masoodKhan 03AbdulWajid rana 03Appointed during the year4. JamilAhmedKhan 045. Abdulaziz A. Al Sawaleh 066. Fadhil Al Ansari 06


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7. Dr. Syed Ismail Shah 05KamranAli 01Appointed during the year8. Abdulaziz H. Taryam 069. Dr. Ahmed Al jarwan 06Composition ofAudit CommitteeComposition of HumanResource CommitteeAttendance ofPTCL Board MembersPakistan Telecommunication Company Limited


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Statement of Compliance with the Code of Corporate Governance

This statement is being presented to comply with the Codeof Corporate Governance contained in Regulation No. 35 of

listingregulationsoftheKarachi&LahoreStockexchange

(Guarantee) Limited and Chapter XI of the Listing Regulations

ofthe

IslamabadStockexchange(Guarantee)Limited,forthepurposeofestablishingaframeworkof

goodgovernance,

whereby a listed company is managed in compliance with thebest practices of corporate governance.

The Company has applied the principles contained in the CCGin the following manner:

1.The Board of Directors (the Board) comprises of nineMembers. Pursuant to the provisions of the Share

Purchase Agreement between the Government ofPakistanandtheStrategicInvestorandalsoArticlesof


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AssociationoftheCompany,theGovernmentofPakistan

nominates four Members on the Board of the Company

whileetisalatInternationalPakistan(eIP)nominatesfive

Members. All Members of the Board are non-executiveDirectors and were elected in the AGM held on October31, 2009.

2.The Directors have confirmed that none of them is servingas a director on more than seven listed companies,including this Company.3.All the resident Directors of the Company are registeredas taxpayers and none of them has defaulted in paymentofanyloantoa

bankingcompany,adFIorannBFIor,beingamemberofa

stockexchange,hasbeendeclaredasadefaulterbythat


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stockexchange.

4.Casual vacancies occurring on the Board on 22-02-2012and on 06-06-2012 were filled up by the Directors within30 days thereof.5.TheCompanyhaspreparedaCodeofConductandhasensuredthatappropriatestepshave

beentakentodisseminate it throughout the Company along with itssupporting policies and procedures.

6.The Board has developed a vision/mission statement,overall corporate strategy and significant policies of theCompany. A complete record of particulars of significantpolicies along with the dates on which they wereapproved or amended has been maintained.

7.All the powers of the Board have been duly exercisedand decisions on material transactions, includingappointment and determination of remuneration andterms and conditions of employment of the CEO, otherexecutivesandnon-executivedirectors,havebeentakenby the Board.

8.The meetings of the Board were presided over by theChairman and the Board met at least once in everyquarter. Written notices of the Board meetings, alongwithagendaandworkingpapers,


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werecirculatedatleastseven days before the meetings. The minutes of themeetings were appropriately recorded and circulated.

9.The Board arranged a certification training program forone of the Directors during the year.10.The Board has approved appointment of CFO, CompanySecretary and Head of Internal Audit, including theirremuneration and terms and conditions of employment.However, there were no new appointments of CFO,Company Secretary and Head of Internal Audit during thefinancial year ended june 30, 2012.11.The Directors report for this year has been prepared incompliance with the requirements of the CCG and fullydescribes the salient matters required to be disclosed.12.The financial statements of the Company were dulyendorsed by CEO and CFO before approval of the Board.

13.The Directors, CEO and executives do not hold anyinterest in the shares of the Company other than thatdisclosed in the pattern of shareholding.14.The Company has complied with all the corporate andfinancial reporting requirements of the CCG.15.The Board has formed an Audit Committee. It comprisesof four members; all members are non-executiveDirectors including the chairman of the committee.16.The meetings of the audit committee were held at least

once every quarter prior to approval of interim and finalresults of the Company and as required by the CCG. Theterms of reference of the committee have been formedand advised to the committee for compliance.

17.The Board has formed an HR and RemunerationCommittee. It comprises of six (06) members, allmembers are non-executive Directors and the chairmanof the committee is a non-executive Director.18.The Board has set up an effective internal audit function.19.

The statutory auditors of the Company have confirmedthat they have been given a satisfactory rating underthe quality control review program of the ICAP, that theyor any of the partners of the firm, their spouses andminor children do not hold shares of the Company andthat the firm and all its partners are in compliance withInternational Federation of Accountants (IFAC) guidelineson code of ethics as adopted by the ICAP.20.The statutory auditors or the persons associated with


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them have not been appointed to provide other servicesexcept in accordance with the listing regulations and theauditors have confirmed that they have observed IFACguidelines in this regard.21.The Closed Period, prior to the announcement ofinterim / final results, and business decisions, whichmaymateriallyaffectthemarketpriceoftheCompany'ssecurities, was determined and intimated to Directors,employeesandstockexchange(s).

22.

Material / price sensitive information has beendisseminatedamongallmarketparticipantsatoncethroughstockexchange(s).

23.We confirm that all other material principles enshrined inthe CCG have been complied with.Islamabad: Walid IrshaidSeptember 11, 2012 President & Chief Executive Officer


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Annual Report 2012

Review Report to the Members

On Statement of Compliance with Best practices of Code of Corporate Governance

We have reviewed the Statement of Compliance with theCode of Corporate Governance (the Code) prepared by the

BoardofdirectorsofPakistanTelecommunicationCompany

Limited (the Company) to comply with the Listing Regulations

ofthe

Stock exchangewheretheCompanyislisted.

The responsibility for compliance with the Code is that ofthe Board of Directors (the Board) of the Company. Ourresponsibility is to review, to the extent where such compliance

can

beobjectivelyverified,whethertheStatementof

Compliance reflects the status of the Companys compliancewith the provisions of the Code and report if it does not. Areview is limited primarily to inquiries of the Companyspersonnel and review of various documents prepared by the

Company to comply with the Code.

As part of our audit of financial statements we are requiredto obtain an understanding of the accounting and internalcontrol systems sufficient to plan the audit and develop aneffective audit approach. We are not required to consider

whether the Boards statement on internal control covers all

risks


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andcontrols,ortoformanopinionontheeffectiveness

of such internal controls, the Companys corporate governance

proceduresandrisks.

Further, the Code requires the Company to place beforethe audit committee and upon recommendation of theaudit committee, before the Board for their review andapproval related party transactions distinguishing betweentransactions carried out on terms equivalent to those that

prevail in arms length transactions and transactions whichare not executed at arms length price recording proper

justificationforusingsuchalternatepricingmechanism.We

are only required and have ensured compliance of requirementto the extent of approval of related party transactions by theBoard upon recommendation of the audit committee. Wehave not carried out any procedures to determine whether

therelatedpartytransactionswereundertakenatarms

length price or not.

Based on our review, nothing has come to our attention whichcauses us to believe that the Statement of Compliance doesnot appropriately reflect the Companys compliance, in allmaterial respects, with the best practices contained in theCode as applicable to the Company for the year ended june30, 2012.


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A.F. Ferguson & Co. Ernst & Young Ford Rhodes Sidat HyderChartered Accountants Islamabad Chartered Accountants Islamabad

Engagement Partner: Engagement Partner:

M. Imtiaz Aslam Pervez MuslimDated: September 11, 2012


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Pakistan Telecommunication Company Limited Pakistan Telecommunication Company Limited


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Annual Report 2012

FINANCIAL STATEMENTSFor the year ended June 30, 2012


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AudITorS rEporT To ThE MEMbErS

We have audited the annexed statement of financial position of PakistanTelecommunication Company Limited (the Company) as at June 30, 2012 and therelated statement of comprehensive income, statement of cash flows and statementofchanges in equity together with the notes forming part thereof, for the year then endedand we state that we have obtained all the information and explanations which, to thebest of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Companys management to establish and maintain a systemof internal control, and prepare and present the above said statements in conformity withthe approved accounting standards and the requirements of the Companies Ordinance,1984. Our responsibility is to express an opinion on these statements based on ouraudit.

We conducted our audit in accordance with the auditing standards as applicable

in Pakistan. These standards require that we plan and perform the audit to obtainreasonable assurance about whether the above said statements are free of any materialmisstatement. An audit incl

Documents

Ptc l Annual Report 2012