KARACHI - Pakistan Telecommunication Company Limited is likely to sell off the redundant properties or engages in joint ventures with a property developer to further develop these properties and generate attractive rental income in view of diversifying further its revenue base. The official of PTCL said that the arrival of Ahmed Al Jarwan (General Manager Real Estate - Etisalat, UAE) on the board of PTCL hints to some potential activity in this area. In addition, talk of sale of a certain percentage of the GOP's remaining stake has also been floated in the last few months. It further remains to be seen whether Etisalat would be interested in increasing its stake in the company, which would make it a bigger beneficiary in the future earnings streams of PTCL especially with regards to realization of huge potential capital gains on properties. It is worth to mention here that an important feature of the Share Purchase agreement (SPA) between the Government of Pakistan (GOP) and Etisalat was that the new management will have the right to use redundant property allocated to PTCL for redevelopment. According to details provided by the management, more than 95% of the 3,276 property titles in total have been transferred under the name of PTCL. As all these properties are carried in the accounts at book value, majority of which date back to the TNT days, there remains great unearthed potential for PTCL. The recent launch of three new packages by Pakistan Telecommunication Company (PTCL) has been ignored by the investment community at large. These packages will significantly improve the earnings of the company, especially in view of the reduction in local call pulse duration from five minutes to two minutes. In addition, revision in Access Promotion Contribution (APC) rates from US$0.02 per minute to US$0.05 per minute effective May 1, 2008 is also expected to boost the top line of the company as PTCL enjoys the status of the largest Local Loop (LL) operator in the country. The company has recently announced a new range of packages effective April 1, 2008. These packages, which are divided into three broad categories namely, Basic Plus, Pakistan Plus and Value Plus are expected to revitalize the revenues of PTCL. According to the details released by the company, all subscribers of Pakistan package will be automatically transferred to the Pakistan Plus plan, while subscribers who did not initially opt for the Pakistan package will now shift to the Basic Plus plan. PTA has decided to revise the APC charge from US$0.02 to US$0.05 effective May 1, 2008. As a result of this revision we expect PTCL's annualized earnings to improve by Rs0.40 per share. APC was introduced for promoting infrastructure expansion, and is the premium over the LDI licensees fixed share on international incoming termination rate. It is passed on to LL licensees to encourage them to increase tele-density. Due to significant decline in incoming termination rates, APC declined to US$0.02 per minute from US$0.06 per minute in 2004. However, the local loop operators have finally been able to convince PTA to revise APC charges. The major difference between the two new packages is the free 2,500 National Wide Dialing (NWD) minutes offered in the Pakistan Plus package for an additional charge of Rs199 per month. In addition to these two purely fixed line packages, a new package called Value Plus catering to the internet savvy customers has also been launched. The package offers 1200 free internet minutes along with 25 free NWD minutes for a fixed charge of Rs75 per month. While main features of the packages are similar to those encompassing the Pakistan Package launched last year, the striking feature seemingly ignored by most investors is the reduction in the local calls pulse duration from five minutes to two minutes. With more than 20% of the total revenues of PTCL generated from local calls, revenues are likely to witness a handsome turnaround as a result of this new development. With the launch of the new packages, the company has attempted to target the lucrative corporate clients as the major avenue for future earnings especially in the fixed line segment. Therefore, while retail customers are likely to curtail their current usage, albeit with a lag reaction or switch to cellular services, corporate customers are unlikely to make any shift, as telephone cost contribute an immaterial amount to their total costs. With average duration of a local call ranging somewhere between 2.5 - 3 minutes, majority of the calls previously classified as one unit would now be charged as two units.