Despite a difficult operating environment, Pakistan’s top mobile network operator (MNO) was able to achieve double-digit growth in key financial metrics in the most recent quarter. According to the most recent financial reports made public by Veon, the parent company of Pakistan Mobile Communications Limited (‘Jazz’), the cellular giant’s total revenues increased by 11% year over year to reach Rs63.5 billion in 2QCY22. This growth was fueled by a continuation of the strong growth in data revenues brought on by an increase in the number of 4G subscribers.
By the conclusion of the April–June quarter, the largest MNO had over 38 million 4G subscribers, an increase of more than 24% over the same time last year. As a consequence, data revenues increased by 28 percent to about Rs27 billion. By the fourth quarter of this year, at this rate, Jazz data sales may account for half of the top line. By the end of June, the operator had 4G coverage in 56 percent of the nation, a little increase over June 2021. This may be improved.
Overall, the operator’s ARPU (average revenue per user), which was Rs253/month over the three-month period, only slightly increased from the same time previous year. After accounting for inflation, the ARPU increase is severely negative in real terms. The assessment on ARPU (in foreign currency terms) for the group level is even more depressing given the recent rapid decline in the Pakistani rupee (PKR). Increases in taxes (mainly WHT on account recharge) that further reduce ARPU are not helpful.
Jazz’s EBITDA (profits before interest, taxes, depreciation, and amortisation) increased by 20% year over year to Rs30 billion, which is another encouraging development. Comparing this rise to the topline gain of 11%, it was disproportional. Due to this, EBITDA margin increased by more than 3 percentage points from 2QCY22 to 2QCY22, reaching 47%. Veon ascribed this surge to one-time adjustments for Warid’s licence renewal fees and SIM-tax reversal that were paid in 2QCY21. Jazz’s EBITDA growth exceeded topline growth even after discounting such adjustments, despite a significant increase in fuel and utility costs.
According to the most recent report, Jazz expanded its 4G network by 400 sites throughout the quarter. However, the general trend of investments appears to be declining as the first-ranked MNO’s capital expenditures fell by 18% year over year to Rs11 billion in the examined period. Operators may feel it smart to emphasise getting through this stormy period without major financial degradation in light of the present unstable macroeconomic scenario and the industry’s long-standing problems. Due to its size and business model, Jazz, it would seem, is better able to accomplish that goal than other operators.
