Worldcall Telecom Shows Huge Loss in Year 2013
Annual Financial Statement of World telecom Ltd.
Karachi (Daily Business Recorder / Tuesday, February 11, 2014) – WorldCall Telecom (WTL) closed its last financial year (CY13) with a huge net loss. That makes it the fourth loss-making year for the troubled telecom firm in last five years.
WTL’s woes are operational as well as financial in nature. Once deemed a rising prospect in Pakistan’s wireless telephony and broadband segments, the firm has been losing its space to competition from both new and old operators.
The firm’s revenues have been on a decline since they peaked back in CY09. This decline has worsened in recent years. The CY13 net revenues slumped by a massive 55 percent over previous year, and are almost the same as they were in CY08.
Meanwhile, cost pressures have only grown despite failing top line. The direct costs (core costs) consumed 127 percent of net revenues during the year. That marks a strong deviation from the direct cost/net revenue ratios of 93 percent for CY12 and 83 percent for the five-year average (CY08-CY12). Operating costs also consumed a higher, 49 percent of net revenues compared 27 percent in CY12.
With margins now firmly in the red, more damage came from an 88 percent decline in ‘other income’ and a 40 percent increase in ‘other operating expenses’. Though the finance costs declined by a healthy 49 percent, thanks to the sinking revenues these costs ate up 20 percent of revenues in CY13 compared to 17 percent the previous year.
The blighted income statement threw up a pre-tax margin of negative 110 percent, meaning the firm effectively lost money in CY13 more than it earned.
In the end, CY13 culminated for WTL with a thumping after-tax loss of Rs2.3 billion, which was 40 percent higher than the CY12 net loss.
It appears that CY14 will likely be another tough year for WTL. Therefore, it is of critical import that the management arrests the top line decline at the earliest, for all chances of revival start from there. Management has disclosed to its shareholders about planned capital expenditures for network up gradation and expansion. One hopes the projects’ timely execution can pull WTL out of this quagmire.
KSE Notice – WORLDCALL TELECOM LIMITED
Rs (mn) CY13 CY12 chg
Revenue-net 3,188 7,119 -55%
Direct cost (4,043) (6,606) -39%
Gross margin -27% -7% –
Finance costs (636) (1,245) -49%
Other operating exp. (520) (370) 40%
Loss after tax (2,302) (1,650) 40%
Loss per share (Rs) -2.78 -1.92 45%
Net margin -72% -23% –