KARACHI: The telecom sector attracted foreign direct investment (FDI) of $81.9 million against a disinvestment of $184.9m in the corresponding period last year, said a State Bank’s recently issued report.
The improvement came on the back of rise in the number of subscribers to 3G/4G services, from 1.9m in July 2014 to 7.7m in December.
The situation further improved as the FDI in the sector rose to $126.9m during the first 11 months (July-May) of 2014-15.
“The cellular service providers have started rolling out a range of new products to their customers following the spectrum auction of 3G/4G licences in April 2014,” the report observed.
This also includes existing customers who have converted to packages offering high speed data usage, said the report, adding that at the same time the launch of 3G/4G services is also supporting the broadband services in the country.
Firms have been investing in upgrading their systems and network, which is reflected in an increase in foreign direct investment and a surge in telecom imports, said the report.
In addition, telecom imports during in the first half of FY15 grew by 21.3 per cent against a decline of 27.5pc in the corresponding period of FY14.
The government provided some relief in the budget 2015-16 by reducing the advance income tax on telecom services from the 15pc to 14pc and cutting GST/FED from 19.5pc to 18.5pc.
“The ICC World Cup 2015 could boost revenues of telecom operators as they have offered various products from real-time score updates to live streaming of cricket matches,” the SBP report said.
The key challenge for the telecom sector is the recent drive by the government to carry out biometric verification of all SIMs. This means all unverified subscribers will be blocked after the expiry of the deadline.
“In other words, companies will lose some of their customers as a result of this campaign. At the same time, this re-verification drive adds to financial burden of telecom companies. For example, instead of marketing new SIMs, telecom companies are focusing more on re-verification of existing subscribers; and this required investment to procure devices and systems used in the biometric verification,” said the report.
“The performance of PTCL also remained weak during first half of FY15. Additional cost incurred on voluntary separation scheme brought down the operating profits from Rs8.6 billion at end-June 2014 to Rs4.5bn by end of Dec 31, 2014,” said the SBP report.
Published in Dawn, June 30th, 2015
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‘Black Monday’ as bank lockdown spooks Greeks
ATHENS: It has been dubbed “Black Monday” — jittery housewives, shoppers and business owners queued in vain at cash machines in Athens, as the country grappled with capital controls and shuttered banks.
“I have a baby to feed, what am I supposed to do?” secretary Zoe Kallis, 32, told AFP after failing to get money out of the third ATM she had tried in the wealthy Kolonaki district.
For a country used to dealing largely in cash rather than credit cards, Prime Minister Alexis Tsipras’s decision to close banks for seven days and limit withdrawals has unnerved Greeks.
The measure is expected to hurt: cash in hand is more likely to be stashed under mattresses rather than splashed on new clothes, restaurants or the wages of those working in the vast black economy.
Cafe tables were laid out in the sun all over the city, but owner Nikos Gyallitsis said he expected a 50-per cent drop in customers, with people keeping their money for essentials like food and petrol.
“To shop you have to be happy, be confident, and now you don’t know what will happen the next day,” he said.
Nearby, clothing shop owner Panayotis Vergetis said he was slashing 30pc off his wares this week in a bid to lure people in.
Not only could Tuesday turn out to be the day that Athens defaults — the government’s coffers are bare, and it is unlikely to make a 1.6-billion-euro ($1.77bn) payment to the International Monetary Fund — but it is also supposed to be pay-day for many.
‘No money, no hope’
“I’m afraid I’m going to lose my job, to be broke,” said Sofia Chronopoulos, who works in a fabric shop. “The banks are closed, the boss has no money, there are bills to pay,” she said.
With a referendum looming on July 5 on whether to accept the latest bailout deal, there was a ‘vote No’ demonstration planned for the evening, with a ‘vote Yes’ parade scheduled for Tuesday.
An emotional outburst by European Commission chief Jean-Claude Juncker — who said he felt betrayed by Tsipras’s government over the breakdown in bailout negotiations, and urged voters in Greece to say ‘Yes’ — was met with scepticism.
“I feel like I’m voting for sudden death or slow death,” said office manager Maria, 38, who wants Greece to stay in the European Union but failed to see how she would pay her taxes if they were raised any further.
She said the heated exchange — in which Juncker insisted a ‘No’ would be a no to Europe, and Athens cast doubt on the EU chief’s ‘sincerity’ — suggested “someone is lying, or rather, they probably both are. It feels like it’s game over.”
‘Calm before the storm’
While cash withdrawals are officially limited to 60 euros a day, many Greeks said they had tried and failed to get any money out at all.
A panicked-looking Chris Bakas, 28 and unemployed, was sweating as he stared at the ATM screen.
“No money, no hope, how did we get in this situation? This is Black Monday,” he said.
Others said it was all being made worse by a “pack-like fear”, urging fellow Greeks to keep their heads.
On the city’s historic Syntagma square, the scene of fierce riots in the past over biting austerity measures imposed by the country’s international creditors, tourists snapping photographs of the parliament buildings said they felt the tension in the air.
“There’s a sort of eerie calm, perhaps the calm before the storm,” said Jestin Marina from France, on holiday with her husband and son for three days.
The family brought extra cash with them and had been warned about the possibility of being targeted by thieves, but said, “We’re not afraid.”
Fellow tourist Michele Ammann from Switzerland said he too had brought a lot of cash with him.
“We’ve been budgeting to make sure it doesn’t run out. Our hotel is in the suburbs and people there seem very tired, very worried,” he said. “I feel sorry for the Greeks, they’ve been asked to sacrifice everything, right down to their underpants.”
Published in Dawn, June 30th, 2015
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Individual investors help index gain 208 points
KARACHI: The stock market staged strong rally on the first trading day of the week (Monday) as the KSE-100 index gained 208.42 points (0.62 per cent) to close at 34,093.55.
With the market having lost 1.6pc last week, individual investors came forward for cherry-picking at attractive valuations.
Individuals, among the local participants, were seen to be the major drivers of the market with net purchases of $8.39 million mainly in the last trading hour. Foreign investors and banks sold $1.23m and $6.57m worth stocks, respectively.
“Major activity was witnessed in the banking sector with Bank Alfalah, MCB Bank, National Bank and Bank Al-Habib up by 3pc, 2pc, 1.7pc and 1.2pc, respectively,” stated analysts at major brokerage house.
Traded volume declined 27pc to 294m shares while value was down by 36pc to Rs8.1 billion over the previous session.
The local stock market seemed to ignore the Greek crisis that was pushing down global equity markets.
Analyst Ahsan Mehanti at Arif Habib Corp stated that the stocks closed bullish amid satisfactory marking of the seventh review of Extended Fund Facility. |
“Higher banking spreads data for May 2015, recent Moody’s upgrade on deposit ratings of five banks and falling borrowing costs played a catalyst role in positive sentiments at KSE ignoring Aptma’s decisions to voluntary shutdown textile industry on energy issues,” analyst said.
Investors’ interest was also seen in cement stocks where DG Khan Cement, Lucky Cement and Fauji Cement rose by 1.7pc, 1.6pc and 0.8pc, respectively.
Analyst Ahmed Saeed Khan stated that the index heaviest weighted sector remained depressed but changed its outlook in the last half-an-hour as most major scrips ended in green. Profit-taking was witnessed in tractor stocks.
Published in Dawn, June 30th, 2015
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PRL doubles petrol output to 24,000 tonnes
KARACHI: Pakistan Refinery Limited (PRL) has started its isomerisation plant which is set to double the refinery’s monthly petrol output from 12,000 to 24,000 tonnes, which means an additional production of 16 million litres.
The plant, which started on June 26, would convert naphtha into petrol and is expected to save an annual $12m to $14m (on the basis of current prices) of foreign exchange to the national exchequer by import substitution.
Aftab Husain, PRL managing director, said the total cost of investment in the isomerisation plant is $50m. The additional production would hit the market by the end of next month and would help in narrowing the petrol deficit in the country, he said.
He said this is the first modular plant of UOP/Honeywell, USA, in Pakistan. It was scheduled to be completed in August 2015.
The plant was built in the UAE and shipped to Karachi for on-site installation. The entire engineering, procurement and construction (EPC) phase took 20 months, whereas the typical time frame for conventional plants of this size and complexity is around 30 months, he said.
Pakistan started importing petrol with 127,385 tonnes from 2007-08. Since then the volume of imports has continued to swell, touching 2.838m tonnes in July-May 2014-15 due to demand and supply gap and increasing use of petrol because of CNG shortage.
From 2007-08 to July-May 2014-15, petrol imports hit new highs. A record 349,386 tonnes were imported in April 2015.
Moreover, decline in the price of petrol, from Rs108 to Rs78 per litre in almost a year, also encouraged buyers to go for the fuel. Rising generator imports is another reason behind the spike in demand for petrol.
Increasing car and bike production followed by frequent arrivals of imported cars, especially 660cc, have also helped boost petrol demand.
Imports constitute 65-70 per cent of Pakistan’s petrol demand. The remainder is met with the help of local refineries.
Refineries are producing 130,000-135,000 tonnes of petrol per month out of total sales of 4.2-4.4m tonnes expected in the current fiscal year. Actual sales of petrol rose to 3.865m tonnes in 2013-14 from 1.183m tonnes in 2005-06.
The Oil Companies Advisory Council (OCAC) on its website had forecast demand for petrol at 4.638m tonnes in the outgoing fiscal year, which would go up to 5.333m tonnes in 2015-16, 5.867m tonnes in 2016-17, 6.453m tonnes in 2017-18 and 7.1m tonnes in 2018-19.
Published in Dawn, June 30th, 2015
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SECP approves book-building regulations
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved the 2015 Book-Building Regulations which are expected to help promote the primary market and to extend maximum facilitation to Initial Public Offerings (IPOs) in Pakistan.
Book building is a common practice in developed markets and is being used in emerging markets as well.
The decision was taken by the policy board of SECP to amend and upgrade the previous book-building regulations as they are not effectively enforceable due to non-applicability of these regulations to the book runners and non-availability of any penalty clause in them.
The new book building regulations highlight that the total offer size should not be less than 25 million shares and the maximum bid size by a single bidder is 10 per cent of the book-building portion.
The associated companies and associated undertakings of the issuer or the offerer shall not in aggregate make bids for shares in excess of 5pc of the book-building portion. The new law has banned the related employees to participate in the bidding for shares.
These include the employees who are directly involved in the ‘Issue’ or the offer for sale, of the issuer, the offerer, the book runner and sub-book runner.
Under the new law, ‘Person’ eligible to perform the functions of book runner are required to be registered as a book runner with the SECP.
Prospectus is required to be published and circulated just once, that is before commencement of the book-building. The new law has mechanism for pre-registration of the potential bidders with the institution providing the book-building system, and the provision has been included for payment of margin money through online transfer.
Restriction has been imposed on making consolidated bid, that is ‘bid which is fully or partially beneficially owned by persons other than the one named.’
Under the new system, an eligible investor shall not make a bid with price variation of more than 20pc of the prevailing indicative strike price, and the bidding shall remain open for at least two days.
There is a restriction on release of the subscription money that was received against the bids accepted.
The restriction will remain till credit and dispatch of all shares allocated under the retail portion of the issue and issuance of NOC by the relevant securities exchange in case the company is already listed or there is formal trading of the company in case of new listing.
There is restriction on withdrawal and downward revision of bids after 4pm on last day of the bidding period too. A fine up to Rs10m can be imposed on any company which fails to comply with the regulations or which refuses to abide by it.
Published in Dawn, June 30th, 2015
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