Total Report PDF

lnLernshlp reporL on 1CL
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CHAPTER 1
INTRODUCTION TO THE
REPORT


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INTRODUCTION TO THE REPORT

1) BACKGROUND OF THE STUDY:
This report is a study oI PTCL. Now as a student why I needed to undertake a study oI
PTCL?
The reason was that during completion oI my BBA (Hons) course work, it was an
academic requirement to undergo an internship Ior 6 or 8 weeks in any reputable
organization so that to test and practice the concepts that I had theoretically learnt in my
courses. And that`s why I undertook an internship in PTCL and now as an academic
requirement, I am putting the details oI that internship Iorward, in the Iorm oI this report.

2) PURPOSE OF THE STUDY:
The purpose oI this study is not to IulIill an academic requirement. Rather the very
purpose oI this study is 'to practically learn all the concepts that I have learnt
theoretically in my whole bachelor`s program. And also to know that what I have
studied is to what extent practically observable or practicable.

) SCOPE OF STUDY:
It encompasses Iinancial planning; implementing designed Iinancial strategies, control
the Iinance operations, analysis oI soItware used by PTCL, shortIalls and weaknesses oI
the organization as well as products & services and Iinally recommendations to the
organization.
I could venture only Iinancial aspects oI the organization (PTCL). But that would have
helped me, meet my study objectives. Now the scope oI this study is very broad. I have
tried my level best to venture each and every aspect and area regarding the organization
and to do justice with it. And that`s why this study gives an overview oI Pakistan
Telecommunication Limited. An overview in the sense that in this very study all areas,
including PTCL`s service marketing, managerial, strategic and Iinancial, have been
ventured into provide that the data Ior this study, that I have used, is the most recent one.

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$o that no inconvenience could occur. But even then my main emphasis in this study is
on the PTCL`s Iinancial, strategic, service related and managerial areas.

4) RESEARCH METHODOLOGY:
In this very report I have used two types oI data:
Secondary data; which helped me a lot composing this report includes, PTCL`s Annual
report, accounts summary, websites, newspapers, K$E`s websites, diIIerent books
relating to diIIerent areas oI concern, articles written about it by diIIerent scholars and
other pamphlets and brochures.
Primary data; includes working with diIIerent personalities oI PTCL (assistant
managers, managers, Directors e.t.c.), discussions about PTCL and its perIormance with
diIIerent people oI concern and most importantly the discussions with PTCL`s employees
oI Finance department.
The data have helped me a lot, composing this report and recommendations given, iI any
in the report are on the basis oI text given in the report, which is based on this very data.
Research methods deIinitely help to get superlative results analyzing the products oI an
organization. I adopt various methods oI research to study the PTCL`s environment,
assets and operations etc. These were included:
$tudying Iinancial reports oI PTCL
'isiting to various departments to observe all the operations
Reading online survey at PTCL`s website
Interviewing PTCL`s Iinance department staII
Interviewing vendors & contractors who were visiting PTCL headquarter
Collection oI data and analyzing it
Presenting Iindings and recommendations
Conclusions


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) SCHEME OF THE REPORT:
$cheme oI the report is straightIorward. The report is divided in diIIerent sections. Each
section consists oI diIIerent chapters. But this division is not done on the basis oI
importance; rather it is a jump Irom shallow to deep water.


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CHAPTER 2
A BRIEF HISTORY OF
TELECOMMUNICATION &
PTCL IN PAKISTAN


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A BRIEF HISTORY OF TELECOMMUNICATION & PTCL IN
PAKISTAN

1) History Of Telecommunication in Pakistan:
The history oI telecommunication in the sub continent is as old as the history oI our
slavery. In the subcontinent beIore independence this sector was under the Indian post
and telegraph department and developed as a successIul industry. The role oI
telecommunication in Pakistan can be broadly divided in to Iour phase.

a) PAKISTAN POST AND TELEGRAPH:
At the time oI independence and telecommunication services were perIormed by a single
department known as Pakistan post and telegraph (P&T).This department started its
telephone service with only 12346 telephone lines and seven telegraph oIIices all over
Pakistan. All the telephone service at that time was manual. This department continues its
business up to 1962.the government oI Pakistan adopted the government oI India
telegraph act 188 to control and direct the activities oI telecommunication.

-) PAKISTAN TELEPHONE AND TELEGRAPH (PT&T):
The Iirst step towards reIorm in telecommunication sector was made in 1962.when the
Ayub khan government decided to split up the (P&T) department into two separate
departments Pakistan post and Pakistan telephone & telegraph (PT&T) under the
presidential ordinance. The PT&T in Iact is a civil service department under the
ministerial controls. This department was headed by director general. The decision
making power was concentrated with the post oI DG, whilst the responsibilities were
delegated to general managers and chieI engineers and general managers reporting
directly to the director general. The centralized structure oI PT&T caused ineIIiciency in
operations and long delay in implementing decisions. At the time oI inception oI PTCL
the total number oI employees working in PT&T was 45686 and total network comported
oI 922,000.


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c) PAKISTAN TELECOMMUNICATION CORPORATION (PTC):

The decade oI 1990s brought about many changes in the
economic structure oI Pakistan. The government oI Pakistan
pursued the deregulation and liberalization policy in
production and service industry. The major change in this
regard was privatization and deregulation oI many oI the
departments oI government oI Pakistan. The objective was to reduce the burden oI the
government minimize the bureaucratic inIluence and improve the eIIiciency oI these
departments.
A major breakthrough in the history oI telecommunication in the country occurred with
the gradual deregulation and privatization oI PT&T, at the Iirst stage Pakistan telephone
and telegraph department (PT&T) was converted into a statutory corporation Pakistan
telecommunication corporation. On December 5
th
, 1990 the PT&T department was
transIormed into Pakistan Telecommunication Corporation with a legal identity separate
Irom the government. This change in the statute introduced by the government oI
Pakistan enabled PTC to move Irom administrative to contractual relationship with its
customer. It provided the opportunity Ior the development oI telecommunication Iacilities
to an unprecedented level and also Ior an increased customer satisIaction. Working under
the PTCL act noxv111 oI 1991, the corporation was responsible Ior establishment
maintenance and operation oI telecommunication services telephone telegraph telex, tele-
Iax and data transmission with in the country and establishment oI international link with
all member countries oI ITU (international telecommunication union).
Pakistan telecommunication corporation in it Iive years liIe spread the network oI its
services all over the country and the total number oI telephone lines expanded TP
2127344 in addition to telegraph the telex services. The total number oI employees at the
end oI 1995 was 53705.
In addition to inland telephone network PTCL did a lot to improve the international
communication. The international communication network oI PTCL comprised oI variety
oI satellite earth stations, terrestrial systems, submarine cable system and coastal radio

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systems, as well as international gateway exchanges.

d) PAKISTAN TELECOMMUNICATION COMPANY LIMITED
(PTCL):
Pakistan telecommunication Company Limited (PTCL) is a company established to
undertake the telecommunication business Iormally carried on by Pakistan
Telecommunication Corporation.
Pakistan telecommunication corporation (PTC) was transIormed into Pakistan
telecommunication company limited (PTCL) on January 1
st
,1996 under Pakistan
telecommunication reorganization act 1996 according to which PTCL took over all the
properties, assets rights and obligations oI PTC. Under the PTCL reorganization act,
1996 the telecommunication sectors were split up into Iour bodies.
O Pakistan Telecommunication Company limited (PTCL)
O Pakistan telecommunication authority (PTA)
O National Telecommunication Corporation (NTC)
O Frequency allocation board (FAB)

Pakistan telecommunication authority (PTA) is a regulatory body responsible Ior
monitoring the telecommunication business in Pakistan. It Irames rules and regulation Ior
private telecom companies such as mobile phone companies, internet service providers,
paging companies and pay card phone companies. It also issues licenses to the new
companies in entering to this business.
National Telecom Corporation (NTC) is responsible to provide the telecommunication
services to the various departments oI government and armed services.
Pakistan Telecommunication Company limited (PTCL) is the primary provider oI
telecommunications services in Pakistan. The range oI its services includes basic
telephone, telegraph, Iax, telex, email, digital cross connect, public data network,
internet, isdn, and other digital Iacilities


Historical Background in chronological order
1947 Posts & Telegraph Dept. established
1962 Pakistan Telegraph & Telephone Dep`t.
1990-91
Pakistan Telecom Corporation
ALI$: 850,000
Waiting list: 900,000 Expansion Program oI 900,000
lines initiated
(500,000 lines by Private $ector Participation
400,000 lines PTC/GOP own resources).
1995
About 5 oI PTC assets transIerred to PTA, FAB
& NTC.
1996
PTCL Formed listed on all $tock Exchanges oI
Pakistan
1998
Mobile(UIone) & Internet (Paknet) subsidiaries
established
2000 Telecom Policy Finalized
2003
Telecom Deregulation Policy Announced

2006 Etisalat takes over


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2) The company`s Background of PTCL
PTCL Privatization:
$aturday, 18th

June 2005 was an important day in the history oI PTCL, which witnessed
the successIul sale oI 26 shares to Emirates Telecommunication Corporation 'Etisalat.
For many, the process oI PTCL privatization might have been a routine government
aIIair, but Iactually the process has been a long drawn and an arduous one.

The Strategic Scale:
The issued share capital oI PTCL is PKR 51,000,000,000, dividend into 51,000,000,000,
ordinary shares oI PKR 10 each, oI which approximately 3,774,000,000 are 'A ordinary
shares and 1,326,000,000 are 'B ordinary shares. In simple terms each 'B ordinary
shares carries Iour votes and each 'A ordinary share carried one vote. In respect oI
dividends, voting rights on all matters (other than election oI directors) and all other
rights as shareholders, there is no diIIerence between 'A ordinary shares and 'B
ordinary shares. Meaning thereby that the strategic investor aIter obtaining 26 shares
(all 'B shares) would manage the aIIairs oI the company but its shares in the dividend
would remain 26 while approximately 12 would go to the current investors in the
market and 62 to government`s kitty.

) The Process of PTCL Privatization:
Historical perspective:-
The privatization process Ior the sale oI PTCL 26 strategic shares commenced in the
year 1998 when a consortium comprising Goldman $achs. Global $ecurities Pakistan
Limited Analysis. Alien & Ovary and Rizvi, I$A & Co (collectively the 'Iinancial
Advisory Consortium or the 'FAC) were hired by the Govt oI Pakistan 'GOP Ior this
transaction. However, the transaction was impacted by the sanctions imposed on Pakistan

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in the aIter match oI nuclear donation in 1998. In the year: 2001, JP Morgan joined
Financial Advisory Consortium (FAC) and took the lead on marketing and executing the
transaction. The years 2001-2003 witnessed the transaction being aggressively marketed.
However, the process could not be Iurther progressed because Pakistan was not perceived
as an attractive investing destination primarily due to post 9/11 implications. This not
with-standing, preparation Ior, due diligence i.e. Data Room updating and inIormation
memorandum (IM) were almost completed by August 2003 but the transaction could not
proceed ahead as 2 out 3 pre-qualiIied bidders did not proceed Iurther. Meanwhile,
during November 2003 to Mar 2004 there were serious discussions and considerations at
the ministry oI InIormation Technology 'MOIT and privatization commission (PC) on
PTCL restructuring i.e. unbundling loop. AIter a protracted debate on various options the
president oI Pakistan decided in November that PTCL should be sold as an integrated
entity.

The Bidders
In the Iinal process oI bidding, this was concluded in June 18, 2005. Investors submitted
expression oI interests ' EOIs ' out oI which did not submit statement oI qualiIication
($OQs).out oI 12 $OQs, 2 did not meet bidding requirements, hence 10 potential buyers
were invited Ior due diligence process. Out oI these were dropped and 7 bidders came to
Pakistan in the months oI April and May-05 to take part in the due diligence process.
Finally, 3 bidders $ingapore telecommunication ($ing Tel), China Mobile (Hong Kong)
Limited and Etisalat participated in the Iinal bidding process held in Islamabad on June
18, 2005.

Due diligence commence (virtual data room ('CR) opens up); Management
presentations to pre-qualiIied bidders held at the beginning oI each due diligence week;
three bidders invited each week to attend management meetings and conduct site visits.

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Bidding held:
$hares purchase Agreement signed by Etisalat; 10 oI the bid amount (Iirst installment)
deposited.
Emirates Telecommunication Company (Etisalat):
Founded on 30th August 1976, the Emirates telecommunications Corporation Etisalat
provides telecommunication services to the United Arab Emirates, and is one oI the
leading service providers in the Middle East.
Etisalat is embracing new technologies, new philosophies and new ways oI doing
business. There new Corporate Logo and identity is a catalyst Ior this charge.
Etisalat deals in 'oice communication, Wireless Communication, Data Communication,
Broadband Internet service provider.
Etisalat was one oI the Iirst to introduce mobile telephones in the Middle East in 1982
and launched the G$M $ervice in $eptember 1994.
Message of Etisalat`s CEO:
Mr. Walid Irshad, ChieI Executive oIIicer, Etisalat says that the new management will
take steps Ior improving quality, recognition and extension oI PTCL service to more
areas and customer care. He Iurther added that technical staII might be sent to AIrica and
other countries aIter imparting additional training them. Mr. Walid Irshad at utilizing the
expertise the skills oI PTCL employees in a proper way and that no PTCL employee
would be relieved.
Emirates Telecommunication Corporation (Etisalat) was the highest bidder Ior the
acquisition oI a 26 stake in Pakistan Telecommunication Corporation Limited (PTCL).
This latest win reIlects the determination oI Etisalat to strengthen its position as the
leading telecommunication company in the region.

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The acquisition oI 26 oI PTCL provides Etisalat international access to the
management oI the company and a pool oI experienced proIessionals. This combined
with the Iinancial resources, provides a suitable platIorm Ior Iurthering Etisalat`s
international ambitions.

At the time when Etisalat start management, Ptcl was providing the Iollowing products &
services;
Prepaid Calling Card
Asaan Prepaid Telephony
Toll Free $ervice (0800), especially Ior business customers
Universal Access Number (UAN)
Universal Internet Number (UIN)
Universal Access Number (UAN)
Premium Rate $ervice (900)
'irtual Private Number ('PN)
Local Cal OIIers
Bill Payment Facilities

4) OB1ECTIVES OF THE COMPANY:

The primary objective oI Pakistan Telecommunication Company limited is to provide
telecommunication services to the people in the country or in short to satisIy the
telecommunication needs oI its customers. Responding to the rapid economic and
technologically growth the company is determined to meet the change oI expanding
needs oI telephone in data communication such as public data network, integrated
services, and digital network and internet services.

The major Iocus oI attention is to improve and expand the service, minimize the Iaults
and provide communication Iacilities to rural areas. It is also one oI the major objectives

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oI the management that the company should not improve its perIormance but also
encourage the private sector to enter the telecommunication business.
The company has entered the domain oI Iree marketing economy, which necessitates the
liberal management in private sector. The Iollowing basic policy steps have been taken to
meet the objectives laid in PTCL act to expand and operate telecommunication services
in the country. The major objective oI any company is to earn the proIit and minimize
expenses by wining good will in the market.

The Iocusing objectives oI PTCL can be divided in to two phases.
O Financial objectives
O Marketing objectives

The Iollowing are the long term objectives oI the organization.
Telecom services all over the country
Plain, establish and maintain telecommunication
Acquire, promote and manage research and development, transIerred oI
technology and soItware development include manuIacturing oI
telecommunication equipment and plant
Enhance eIIiciency, improved quality and expand the system to meet
customer`s satisIaction and provide services on demand
Create convenient climate Ior binding oI human skill and horizon oI
employees to training oI education
Convert its cash basis single entry accounting system to approval basis
double entry system meeting the commercial international accounting
standards.
Launch consumer`s satisfaction survey.
O The major purpose oI this survey is to identiIy the needs & wants oI
their customers and giving an esteem position to customers
O To introduce computerized directory assistance and complaints
services reIorm billing and a revenue collection system

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O $trengthen relation with Ioreign international administration,
entities, service providers, international and regional telecom
organization Ior better international communication and technical
cooperation in telecommunication business
O Expand customer awareness oI all value added services (PTCL) to
improve the eIIiciency oI customer service centers while deputing
qualiIied persons who are well aware oI public relation techniques.
O To introduce new services oI audio taz and video conIerencing Ior
the business community.


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CHAPTER 3
Organizational Review of PTCL


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Organizational Review of PTCL

1) Vision:
'To be the leading InIormation and Communication Technology (ICT) $ervice Provider
in the region by achieving customer satisIaction and maximizing shareholders` value.
'The Iuture is unIolding around us. In times to come, we will be the link that allows
global communication. We are striving towards mobilizing the world Ior the Iuture. By
becoming partners in innovation, we are ready to shape a Iuture that oIIers telecom
services that bring us closer.
2) Mission:
To achieve our vision -y having:
An organizational environment that Iosters proIessionalism, motivation
and quality
An environment that is cost eIIective and quality conscious
$ervices that are based on the most optimum technology
Quality and Time conscious customer service
$ustained growth in earnings and proIitability
) Core Values:
ProIessional Integrity
Customer satisIaction
Team Work
Company Loyalty
Corporate InIormation



4) Corporate Information:
The Memorandum oI Association oI the Company entails the Iollowing basic Ieatures
as by Company`s Ordinance, 1984.
a) Name of the Company:
'Pakistan Telecommunication Communication Limited (PTCL)
-) Registered Office:
'PTCL Headquarters G-8/4, Islamabad-44000, Pakistan
Tel: 92-51-2263732 & 34
Fax: 92-51-2263733
Email: Companysecretaryptcl.net.pk
Website: www.ptcl.com.pk

c) O-ective of Formation:
The main objective oI the Company is to provide telecommunication services to its
subscribers residing in Pakistan as well as Ioreign customers residing outside oI
Pakistan.
d) Bankers of the Company:
The main banks accounts oI PTCL are in the Iollowing banks, according to the
annual report oI PTCL 2010.
Askari Commercial Bank Limited
Bank AlFalah Limited
Bank Al-Habib Ltd
The Bank oI Punjab
Citibank N.A.
Dubai Islamic Bank


Faysal Bank Ltd
Habib Metropolitan Bank Ltd
Muslim Commercial Bank Ltd
Meezan Bank Ltd
National Bank oI Pakistan
NIB Bank Ltd
Royal Bank oI $cotland
$ilk Bank Ltd
$ME Bank Ltd
$tandard Chartered Bank (Pakistan) Ltd
United Bank Ltd

e) Auditors of the Company:
As required by the Companies Ordinance 1984, the Iollowing are the auditors oI the
PTCL;
M/s A. F. Ferguson & Co.
Chartered Accountants
Ernst & Young Ford Rhodes $idat Hyder
Chartered Accountants

f) Board of Directors:
Mr. Nafibullah Malik
Chairman PTCL Board
$ecretary IT & Telecom Division, Ministry oI InIormation Technology
Government oI Pakistan,
Islamabad

Mr. Abdulrahim Abdulla Abdulrahim Al Nooryani

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Chairman & Chief Executive Officer
Etisalat International Pakistan L.L.C
Executive 'ice President Contracts & Administration
Etisalat, UAE

Mr. Salman Siddique
Secretary (Finance), Ministry of Finance
Islamabad

Mr. Abdula:i: Ahmed Saleh Ahmed Al Sawaleh
Chief Human Resources Officer
Etisalat, UAE

Mr. Mushtaq Ahmad Bhatti
Mem-er Telecom
Islamabad

Mr. Fadhil Mohamed Erhama Al Ansari
Executive Vice President Engineering
Etisalat, UAE

Mr. Khursheed Ahmed Junefo
Am-assador, Em-assy of Pakistan
Abu Dhabi, UAE

Mr. Abdula:i: Hamad Omran Taryam
General Manager, Northern Emirates
Etisalat, UAE

r. Ahmed Al Jarwan

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General Manager
Real Estate
Etisalat, UAE

Ms. Farah Qamar
Company Secretary PTCL
PTCL Headquarters,
Islamabad

g) Management:

alid Irshaid
President & Chief Executive Officer

Ismail Salih Taha
S.E.V.P (HR & Admn)

Muhammad Nehmatullah Toor
S.E.V.P (Finance)

M. Mashkoor Hussain
S.E.V.P (Operations)

Fa:al Hussain
S.E.V.P (Corporate Affairs)

Sikandar Naqi
S.E.V.P (Special Proects)

r. Sadik Al-Jadir
S.E.V.P (Commercial)


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Shaukat Hayat Javed
Acting S.E.V.P (Technical)

Farah Qamar
Company Secretary

r. Safid Qureshi
E.V.P (Legal Affairs)

h) Composition of Audit Committee:
Abdula:i: H.Taryam
Chairman
Abdulrahim A.AlNooryani,
Mushtaq Ahmed Bhatti,
Muhammad Zuhair
Mem-ers

Farah Qamar
Secretary

The given are Iunctions perIormed by the Audit Committee;
Assists the BOD in approving company`s Iinancial statements, appointment oI external
auditors, reviews scope oI internal controls, monitors statutory compliance, determines
the appropriate measures to saIe guard the company`s assets and recommends placement
& borrowing oI Iunds, it ensures the coordination between the internal & external
auditors oI the company.

i) Composition of the Human Resource Committee:

Abdula:i: A.al Sawaleh
Chairman

Abdulrahim A.Al Nooryani
Mushtaq Ahmed Bhatti

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Fadhil Al Ansari
Abdula:i: H.Taryam
alid Irshaid
Syed Ma:har Hussain
Mem-ers

Farah Qamar
Secretary
The given are Iunctions perIormed by the HR Committee;
Reviews & recommends development & maintenance oI long term HR policies, an
eIIective employee development program, appropriate compensation & beneIit plan and
good governance model in line with statutory requirements and best practices. It ensures
the governance, HR policies and procedures to are aligned with the strategic vision and
core objectives oI the company. It provides leadership and guidance Ior the
organizational transIormational needed in achieving Company`s corporate objectives.

) ORGANIZATIONAL STRUCTURE OF PTCL:

The organizing Iunction creates clear-cut lines oI authority and responsibility in an
organizations thus improving the activating and controlling Iunctions oI the manager. For
example, hazing and placing a person in the wrong job can result in sequent motivational
diIIiculties.

The organizational structure oI PTCL is given as under:

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) Formal Organizational Elements:
There are at least three basic concepts associated with Iormal organizational structure.
They are:
Division of la-or
Departmentation
Span of control

I will try to explain the organizational structure oI PTCL with seperence to the above
there concepts and deviously it will comprise oI much more.

a) Division of La-or and PTCL Organizational structure:

Division oI labor is a synonymous term Ior specialization which simply means:
'To know more and more about less and less.

This is specialization or division oI labor which give birth to departmentation which
again give birth to span oI control. PTCL`s organizational chart is a Iull picture oI the
division oI labor. As we can see that the whole organization is 'departmentalized into
six major activities. These are:
Administration
Finance
Technical
Operations
Human Resources (HR)
Marketing

Although specialization is criticized very much but I must say that Ior a large
organization like PTCL, specialization is a pre-requisite. PTCL`s Organizational chart
shows a vertical expansion in the positions oI the organization.


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And that`s the reason that in PTCL job requirements and manager (in case oI PTCL and
$E'P) speciIications are developed and matched to assign personnel. Every manager or
$E'P in case oI PTCL has his or her own job requirements Ior which he or she is best Iit.
Take Ior example the $E'P Administration department, who is one oI the assisting sub
heads to the company, secretary, GM internal Audit and General Manager $olutions, who
again assist the president.
The administration $E'P in PTCL is obliged to take care oI so many things, Ior example:
He / she have to handle all the issues related to human resource and
planning
Has to take care oI co-ordination among diIIerent departments
Will handle issues related to transport and telecommunication
And so many other activities like public relations, HR telecommunications
etc.
For all these above activities, he / she are then supported by eleven more managers who
again are the experts in their own Iields.

-) Departmentation
As discussed earlier that Departmentation is originated Irom the division oI labor.
'Departmentation is the eIIicient and eIIective grouping oI jobs into meaningIul work
units to co-ordinate numerous jobs. All Ior the expeditious accomplishment oI the
organizational objectives.

i) PTCL`s Basic Organizational Units:
As discussed earlier PTCL`s organizational chart shows that it has six main supporting
sub-heads or working unit or departments. Now the scope oI these main Iundamental
organizational units and the complexity oI the enterprise give rise oI additional
organizational units. These types result mainly Irom such things as the nature and amount
oI work to be done, the degree oI specialization or division oI labor practiced, and the
people and the workplace available Ior the work.
To illustrate, Ior example in PTCL`s organizational chart, taking the supporting head oI
Iinance into consideration, the scope oI the work may be so broad that it is believed

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advantageous to divided the work into accounts, Iinance and revenue and Ior each places
a subordinate (The E'P`s) in charge. A revenue E'P will be appointed to manage the
revenue work in the Iield and so on. These are three additional units appear in the
organization structure at the level immediately below that oI the Iundamental unit oI
Iinance. And as we move down the chart we see that this vertical expansion has taken
place oI each Iundamental level Irom 1 to 6 additional subordinate levels. For example
the services and the work oI the organization continue to grow and conditions become
such that Iurther units are deemed necessary Ior eIIicient operation. Accordingly Irom the
accounts unit is $P'N oII the two subordinate units oI (i) simple book account keeping
and (ii) computerized accounts. $imilarly Irom other two units, additional one
subordinate unit is $PUN oII.

ii) Differentiated Departmentation:
But it is not enough to know that the president is supported by three persons with six
supporting heads ($E'P`s) and they again are supported by their subordinates (E'P`s)
and they have their own subordinates. It`s not the end oI the story rather it`s a mature
beginning oI the story.
The Departmentation we discussed is diIIerentiated because it hasn`t got one single base.
Under the Iinance unit, the Departmentation is done on activity based
Departmentation and similar in the case with administration unit.
Under the technical unit, Departmentation is done on the basis oI subsidiaries and
processes.
Under the operations head, the Departmentation has taken place, on the basis oI
territories or territorial Departmentation.
Under marketing head, the Departmentation has taken place on the basis oI
customer service and activities. And same is the case with HR unit.

Now this expansion gives birth to yet another concept called span oI control.

c) Span of Control:
$pan oI control reIers to the number oI immediate subordinates who report to a manager


wide spans or a manager who has a relatively large number oI immediate subordinates,
usually results in Iew organization levels and a Ilattening out oI the structure. But in case
oI PTCL, it`s and complexity oI the work does play their roles.

i) Centralization and Decentralization:
Centralization tends to concentrate decision making at the top oI the organization
whereas decentralization disperses decision-making and authority throughout and Iurther
down the organization hierarchy. As a result oI vertical expansion instead oI horizontal
expansion, we see that in PTCL the decentralized management operates. Although
centralization is there, but it is only up to the Iundamental level. That`s why PTCL
Iollows a decentralized pattern because it gives, the employ people oI the organization an
impression that the organization belongs to them and they belong to it.

ii) Levels of Organizational Chart:
Every large organization structure contains three levels oI management and so is the case
with PTCL`s organization chart. It also includes those levels namely:
Strategic Level
Business Level
Functional Level

These three levels oI management again serve three basic and important activities. These
are:
The strategy Iormulation and decision-making
Implementation oI the strategies and decisions
Execution oI the decisions

PTCL`s Strategic level: The PTCL`s strategic level, which consists oI the
president and his ultimate Iour subordinates on the top, perIorm the Iunction oI
strategic Iormulation and decision-making with the assistance oI other units.
PTCL`s Business level: PTCL`s business level consists oI the six supporting
expert`s heads and their 12 subordinates. They perIorm the implementation


Iunction.
PTCL`s Functional level: PTCL`s Iunctional level, consisting oI
subordinate units and employees, executes the strategies and decisions taken by
the strategies level and assigned and communicated to them by the business level.


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CHAPTER 4
FINANCE DEPARTMENT


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Finance Department

1) Introduction:
On the basis oI diIIerent Iunctions, perIormed by PTCL's Finance department, the
department is divided into Iour sub-departments.
Revenue Department
Accounts Department
Finance (ERP) Department

Organizational chart oI Finance Department
Muhammad Nehmatullah


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2) Departments in FINANCE:
a) Revenue Department:
The Revenue Department is responsible Ior setting a target oI revenue being achieved
during the year, making action to achieve the desired target and collecting oI revenue
earned.
This branch is also concerned with the issue that may aIIect the revenue in one or the
other way.

Domestic Revenue,
International Revenue
Corporate Revenue

i. Domestic Revenue:
The Iirst source oI domestic revenue is domestic billing that includes line rent and local
call charges etc. secondly domestic revenue is earned through renting and leasing oI
exchanges.

ii. International Revenue:
There are two International Gateway Exchange (I.G.E) oI PTCL, one in Rawalpindi and
other in Karachi. An agreement, total Accounting Rate countries and currency used Ior
this purpose is special Drawing Rights ($.D.R). International revenue is collected in
NA$TRO account oI New York (U$A) Irom all over the world.

Trend of International Revenue, Five years back, international revenue was one third
oI total revenue oI PTCL. With the passage oI time it is decreasing and this decrease is
alarmic situation Ior PTCL's management.
An analysis is conducted to overcome the problem. In this analysis Iirst reason Ior
decreasing trend oI international revenue are Iound. In the second stop suggestions are
given to resolve the problem.
iii. Corporate Revenue:
Other than domestic and international revenue, PTCL is also earning corporate revenue

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through:

PTML-Pakistan Telecom Mobile Limited (UIone)
'A$-PTCL calling cards etc.
CTI-Telephone industries oI Pakistan
WLL-PTCL Pakistan
Financial Investments are contributing a major role towards
corporate revenue.

-) Accounts Department:
The accounts department is responsible Ior all accounting, record oI keeping, publication
oI accounts, audit, employee`s compensation, inventories recording, Fixed Assets
accounting, complete accounting system and internal control, pensions and direct
taxation.
Functions And Duties oI Accounts Department are;
Accounting includes accounting system and Procedure
Ongoing integration oI the entire system
Preparation oI Iinancial records and accounts
Preparation and publication oI annual Iinancial statement
Preparation and disbursement oI salaries
Management oI pension, insurance and benevolent scheme
Management and control oI PTCL store accounts
Implementation oI sound internal checks and control on
expenditures
Finalization oI statutory audit
Compliance with the direct tax requirement
Preparation oI management accounts
Co-ordination with Iiscal authority on Iinancial matters
InIormation incompliance with the legislative oI government
requirements
Appraisal and participation in approval oI procurement proposals.

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c) Finance (ERP) Department:
Finance (ERP) Department is responsible Ior the budgeting, planning and transaction
relating to income and revenue, expenses, pricing control Iunds and treasury measure and
direct taxation.
ERP stands Ior Enterprise Resource Planning, Function and Duties oI Finance(ERP)
Department are;
Assets management
Payments and dealing L/C operations
Releasing Iunds to the running projects
Observing capital work in process (CWIP)
Observing Capital expenditure & Operating expenditure (CAPEX &
OPEX)
Using soIt-wares Ior analyzing diIIerent transactions
Using SAP (Systems, Applications, & Products) soItware Ior transactions
Preparation oI operational, budgets and annual development program
(ADP)
Disbursement oI Iunds against budget Ior revenue expenses
Monthly analysis oI variances with budgets
Control oI Iinancial transitions in billing
Monitoring and management oI domestic and international revenue
collection.
Computerization oI billing Ior all services.
Management accounting system on control on revenue and expenditure.
Maintenance and operation oI bank accounts.
Funds based management.
Cost analysis oI pricing oI various tariIIs and rentals through competent
authority.
The settlement on international telecommunication accounts.
$ettlement oI total accounting rates.

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Complains with indirect tax and other levies.
Preparation oI management oI accounts.
Co-ordination with Government Authorities on Iinancial matters and
related issues.
There are Iurther wings which are working Ior specialized tasks & jobs like; assets
management, cost accounts, Budget & treasury, Procurement, purchase e.t.c.

$ince I was attached to the Assets management oI Finance under GM (Finance ERP). $o
my major area oI learning in PTCL's Finance Department was Assets management.
The organizational structure oI Finance (ERP) is given as under;


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CHAPTER 5
MY Working & Experience in
ASSETS MANAGEMENT


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MY Working & Experience in ASSETS MANAGEMENT

I spend totally six weeks in Assets management under General Manager Finance (ERP)
M.Rizwan sheikh & $enior Manager (Assets management) Khalid Dawood.

There are three wings in Assets management;
1) Fixed assets
2) CWIP (Capital work in progress)
3) L/C (Letter oI Credit)

$o, all oI the above are my major areas oI working & learning their basic concepts. In all
the above wings they are using the $AP soItware.

1) Fixed assets:
Fixed assets are those current & non-current assets which are Ior the long-run &
requiring no need oI any Iurther cost oI capitalization but only needing maintenance &
operational costs.
As PTCL is providing landline as well as wireless services to their customers, thereIore
it needs Iixed assets, like exchanges, boosters, & other telecommunication devices
needing Ior providing services.
$o the total assets oI PTCL as per 2010 report are PKR150, 767,727,000 .
urrent Asset is an asset that satisIies any oI the Iollowing criteria:
It is expected to be realised in, or is intended Ior sale or consumption in,
the company`s normal operating cycle;
it is held primarily Ior the purpose oI being traded;
it is expected to be realised within twelve months aIter the balance sheet
date; or
It is cash or a cash equivalent asset unless it is restricted Irom being
exchanged or used to settle a liability Ior at least twelve months aIter the
balance sheet date.


Aon-urrent Asset is an asset that does not meet the deIinition oI a current asset. Here
we uses the term non-current` to include tangible and intangible assets
As in the Iollowing table;



There are certain tasks & duties perIormed by Iixed assets department , some oI the major
are given as under;
a) Assets capitalization
b) Capital Major works
c) Custom & other duties calculation and clearance
d) Depreciation Run
e) Amortization

a) Assets Capitalization:
Assets capitalization is the adding or including the Iixed assets in the balance sheet and is
ready Ior the operations.
Almost about 90 oI the projects oI PTCL are 'TURNKEY projects, while the
remaining projects are handled by PTCL`s employees.
Assets capitalization may be classiIied in two major Iorms;
i) Business Capitalization
ii) Admin Capitalization

i) Business Capitalization:
The Iollowing process will be executed by Fixed Asset Department Ior Business
Capitalization through $AP:
O Creation oI Asset Master in Capitalization Asset Classes.
O Update oI $ettlemement Rule oI Asset No. in WB$E given by PD
(CWIP).
O Final $ettlement oI Asset either Iull or partial.
O Depreciation Run.
ii) Administrative Capitalization:
The Iollowing process will be executed by Fixed Asset department Ior Administrative
Capitalization;
O Creation oI Asset Master in capitalization asset classes.
O Execution oI CJI3 Ior inIormation regarding capitalization oI Admin
Capex having WB$E.

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O $ettlement oI WB$E to AUC (CWIP).
O Update oI settlement with Iinal No oI Asset Master in WB$E.
O Techo oI WB$Es to be capitalized.
O $ettlements run Ior Iinal capitalization with value date.
O Untecho oI all the WB$E.
O Depreciation Run.

-) Capital Maor Works:
There are two types oI Expenditure:
CAPEX (Capital Expenditure)
OPEX (Operating Expenditure)
All the Opex costs are done through a regional oIIicer (DDO) and the transactions oI
running projects are done by regions. The Iunds oI the projects are released by HQs.
The DDO (Drawing Disbursing OIIicer) can`t use revenue oI their areas in the projects
but they have to demand Iunds Irom HQs.
$AP is not allowing a DDO to a transaction iI there is no Iund in their accounts and every
transaction is done through bank cheques rather than by cash payments.
Regions are taking budgets Irom HQs Ior speciIic projects aIter sending a demand sheet.
Ceiling Iiles are made Ior the purpose to provide regions the credit limit. HQs permit its
bank to release Iunds Ior regions Ior the purpose to continue or IulIill the project which is
running.
HQs are checking the project status by its cost & its expiry date, iI the project cost
become higher than allocated cost or delayed than this issue should be discussed by E'P
or board oI directors
Ceilings Iiles should have the Iollowing documents;
Demand sheet
Project $AP & PC-I status
Project opening

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Budget availability
Asset class appropriateness
DDO endorsement
PD/RGM endorsement
$AP document #
Ceiling branch oI Budget and treasury section is concerned with the issuance oI ceiling
on the basis oI budget allocated by budget-I centralized banking is oI great advantage Ior
this branch. Ceiling is issued to diIIerent drawing and disbursing oIIicers (DDO's)
through proper Iilling oI a Iorm proposed by ceiling branch. DDO's accounts are
basically zero balance account and only credit limit is issued.

c) Custom & other Duties calculation and clearance:
There are two types oI consignment in every project, one is local and the other is Ioreign.
In Ioreign we should have to pay custom duties on imports.
$o in PTCL the documents have to be prepared Ior the custom duties, the CD should be
paid in advance. $o we are clearing the CD in $AP aIter receiving the original invoices.
There are also some other duties and charges like;
O Demurrage charges
O WharIage charges
O CAA(Civil Aviation Authority) charges
O IT ( Income Tax)
O $T ( $ales Tax)
The allocated duties payments are done in advances by receiving Pay Orders Irom
'endors.
The advances payment documents include:
PO#(Legacy & $AP)
Bill oI lading/Air ways bill(BL/AWB)

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Project #
Good declaration document
Demand sheet
Invoice copy
BL/AWB copy
Approval oI GM M&L
PO conditions in $AP
When the item or shipment is received to PTCL, than an entry is done known as GRN
(Good Receipt Notes) or $AN ($ervice Acceptance Note).
AIter receiving the items, all the duties are to be clear in documents & in $AP by
preparing a reconciliation $tatement.
Reconciliation statements have major purpose oI comparing the advances (allocated) &
the actual duties oI which invoices are received, by comparing we will have Iound that
either we have to pay or reimbursed Irom the vendor.
In reconciliation we have to include;
Party
Category oI duty
Total duties amount (Actual assessment)
Pay orders received (advance payments)
Date oI shipment/Arrival
Date oI request Ior Pay order
Date oI receipt Irom L/C department
Date oI Iinal clearance Irom port
JustiIications oI GM materials & logistics

The clearance document oI CD includes;
Good declaration document

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CD payment receipt
Delivery order bill
CAA(civil aviation authority) charges bill
$torage/wharIage charges bill
$ales tax invoice
AWB(Airways Bill)/BL(Bill oI Lading) #
Original commercial Invoice
When all the invoices are received to HQs, than they are paying aIter clearing it in $AP
and as well as aIter analyzing it manually.
emurrage costs, the costs incurred in port aIter Iree port days. When the items are not
cleared in more than Iree days than PTCL have to pay Ior that.
$ometimes the delay may be Irom vendor side, so in $AP there is a separate General
Ledger (G/L) Ior that. When PTCL pay demurrage cost it is debited in Demurrage G/L
against Bank and when it is recovered Irom the vendor than it is credited against 'endor.
$ometimes there is no need to record demurrage cost because vendor paid it beIore
documentation.
d) Depreciation Run:
Depreciation is the systematic allocation oI the depreciable amount oI an asset over its
useIul liIe.
At the time oI capitalization oI every asset the depreciation rate & useIul liIe is
conIigured and given to the system. Because there are about 80,000 assets oI PTCL and
recording the depreciation cost oI every asset is impossible & lengthy process.
Depreciation run may be
Planned
Unplanned
Planned depreciation run is the deducting oI depreciation expense in a manner which is
predetermined & conIigured in the $AP
Unplanned depreciation is the deducting oI depreciation expense in a manner which is
given by the user at the time oI depreciation run in the $AP.

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When depreciation run is executed than it calculate book value oI all the assets in the
Iixed asset register (FAR)
Depreciation methods are those used to allocate the depreciable amount oI an asset over
its useIul liIe. These methods include the straight line method, the diminishing balance
method etc.
The depreciation cost is recorded oI Iixed assets, where the depreciation rate is varying oI
assets to assets. The depreciation rate is conIigured beIore or during capitalization, we
give conditions to $AP that will depreciate that asset at that rate automatically.
The depreciation run may be executed monthly, quarterly, semi-annually or annually.
When the rate oI depreciation is changed by advice oI Auditors than PTCL is running
unplanned depreciation run in $AP. There are two methods oI unplanned depreciation
one is retrospective approach while the other prospective approach.
All the depreciation costs when assigned to the asset than this is known as, Accumulated
epreciation.
When the accumulated depreciation is deducted Irom the asset total value, this value is
known as Book value.
The residual value oI an asset is the estimated amount that the company would currently
obtain Irom disposal oI an asset, aIter deducting the estimated costs oI disposal, iI the
asset were already oI the age and in the condition expected at the end oI its useIul liIe.
Capital Gain is the amount oI money on which the item is auctioned or sold aIter Iully-
depreciating or aIter disposal.
The Book 'alue oI a Iully depreciated should not be less than 1, because when an asset
have value less than 1 i.e., 0 than it will have no value. ThereIore in Planned depreciation
the system is stopping the depreciation when its value become 1.

e) Amortization:
Amortization is the systematic allocation oI the depreciable amount oI an intangible asset
over its useIul liIe.
Borrowing cost is the interest and other costs incurred by the company in connection with
the borrowing oI Iunds. Borrowing costs may include:
interest on bank overdraIts and short-term and long-term borrowings

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amortization oI discounts or premiums relating to borrowings
amortization oI ancillary costs incurred in connection with the
arrangement oI borrowings
Iinance charges in respect oI Iinance leases
exchange diIIerences arising Irom Ioreign currency borrowings to the
extent that they are regarded as an adjustment to interest costs
2) CWIP:
CWIP stands Ior Capital Work In Progress.
Measurement and Recognition Criteria oI CWIP is;
The cost oI CWIP (selI-constructed asset or asset acquired through turnkey projects /
contracts) shall be determined using the same principles as Ior an acquired asset. Any
internal proIits are eliminated in arriving at such costs. $imilarly, the cost oI abnormal
amount oI wasted material, labor, or other resources incurred in selI-constructing an asset
is not included in the cost oI the asset.
Borrowing costs interest, iI any, is recognized as a component oI the carrying amount oI
a selI-constructed item oI property, plant and equipment in line with the requirements oI
the relevant IA$ / IFR$.
CWIP to be recognized in the books oI account oI the company shall take into account all
the direct and indirect costs attributable to bringing the asset to the working condition Ior
its intended use, provided that:
The company shall Iollow a systematic basis Ior the allocation oI costs.
A selI-produced Iixed asset shall be stated at cost.

a) Cost Components of CWIP:
ost is the amount oI cash or cash equivalents paid or the Iair value oI other
consideration given to acquire an asset at the time oI its acquisition or construction or,
where applicable, the amount attributed to that asset when initially recognized in
accordance with the speciIic requirements oI International Financial Reporting $tandards
(IFR$).
The total cost incurred in constructing new Iixed assets shall be capitalized. The cost oI
CWIP shall include but shall not be restricted to:
Direct labor

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Material purchases and / or issues Irom stock
Payments to contractors incurred in asset construction
Overheads allocated on an appropriate basis
Costs oI equipment, installation including testing and commissioning
Financing charges
Other direct expenses such as duties, taxes, insurance and transportation
costs iI any
Allocation oI related general and administrative expenses and any cost
incurred in the construction oI the Iixed assets

-) Capitalization of CWIP
The cost oI CWIP shall be carried Iorward and accumulated in the balance sheet until the
asset is completed Ior its intended usage. Once ready Ior use, the completed asset shall be
capitalized and classiIied into an appropriate asset category.
Asset Master Created by PD (project Director)
$ettlement on AUC will be done by CWIP.
InIormation regarding Capitalization with reIerence to Techo/Untecho will
be taken by CWIP Irom PD.
Intimation oI Capitalization based on Techo will be inIormed by CWIP to
Iixed Assets.
The major tasks assigned to CWIP wing is to assigned the Opex to cost oI Iixed assets.

Annual CAPEX:
Approved cost oI the project
Annual cost allocated to the project
c) Analysis of a proect:
It`s the duty oI project holder to analyze the running project operations but the project is
analyzing on every stage Irom initial to its Iinal completion.

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The project is analyzed as in the given stages;
Technical Ieasibility
Financial Ieasibility (capital budgeting, IRR, NP' e.t.c)
Project appraisal by project appraising committee
Approval by board oI directors
Project planning and capitalization(issuance oI PC-I documents, creation
oI project structure e.t.c)


When the project is completed than it is ready Ior operations & than it can be capitalized.
PC-I is a document that is the approval oI project on the basis oI Iinancial analysis and
capital budgeting result. PC (Planning & Commission) contains details oI total


expenditure, time duration oI projects, cost summary that how many expense incurred in
diIIerent asset classes.

Running projects under observation oI project holder and technical
engineers
Operations starting by operational management
d) Turnkey Proects:
There are also turnkey projects which include the Iollowing steps;

Contract with vendor
Provisional acceptance test (PAT)
Issuing oI provisional acceptance certiIicate (PAC) and it is known as
stability period
Initial payment oI 60
$tability Period
Final appraising Test
Final payment oI 30
Final acceptance certiIicate (FAC) aIter testing and it is also known as
warranty period
Capitalization Period
Warranty period or maintenance period
II, the asset is working in best way than last payment oI 10 is done
Project is closed & the asset is handed over to operation management


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) L/C (Letter of Credit):
L/C wing is dealing with bank & payment transactions. When the payment and bill is
cleared in $AP as well as manual than L/C is paying to outside parties.
PTCL is not paying to anyone in cash mode, but there are two modes oI payments in
PTCL which are;
Cheque
Release through Letter oI credit
In L/C the working oI payment is done, but some transactions/payments done through
letter oI credit or through cheques.
There are main three kinds oI projects/contracts:
I. Purchases
II. $upply contracts
III. Turnkey contracts/projects
I) In Purchases, payment is made on delivery oI goods or services. For goods
GRN (Goods Receipt Note) and Ior services $AN ($ervice Acceptance Note) or $EN
($ervice Entry Note) is done in $AP.
II) In $upply contracts, the payment is made on delivery as per/according to
contract, aIter receiving complete documents e.g. Rate list, bill oI quantities, shipment
invoice, weight and speciIications certiIicate etc.
III) In Turnkey contracts, the payments are made according to payment terms
in contract, already agreed by both the PTCL and contractor, mostly 60 initial payment
on delivery oI goods/services or by receiving PAC (Provisional Acceptance CertiIicate),
remaining 30 payment on installation or by receiving FAC (Future Acceptance
CertiIicate) and the remaining 10 aIter commissioning/complete run, aIter satisIaction
or controlling error to be correct or aIter the warranty period (AIter 6months-1year). PAC
& FAC are issued by concerned engineers aIter testing.
In L/C payments, diIIerent parties involved are called THIRD PARTY. The Third party
is the BANK. Three banks are involved in this process, these are:

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Negotiator Bank: The bank oI contractor/supplier/vendor is called the
negotiator Bank.
Intermediate Bank: The Bank between the 'endor`s bank and PTCL
bank is Intermediate bank; its role is to intermediate between them.
Local Bank: The PTCL`s bank is the local bank, through which PTCL
makes contracts with vendors and makes payments to them. In local bank
the L/C is opened. All the communications regarding L/C is done through
Local Bank.
There are two types oI shipments;
i. By $ea/Marine/ship shipment
ii. By Air/plane shipment

II the shipment is by Sea then a copy oI documents vendor must send beIore One week
and iI the shipment is by Air then vendor must send beIore one day.
These documents are sent by 'endor`s Bank to Local PTCL`s Bank which then are given
to PTCL but the payment is made by PTCL through L/C banks aIter the Original
Documents are received. These documents include;
Commercial invoice
Packing list
Weight & measurement certiIicate
$hipment declaration
CertiIicate oI origin
CertiIicate proving that there is no I$RAELI port or origin
item is used
The documents send to ptcl by bank include;
All documents received to bank in which LC is opened

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Also a letter in which LC number & other useIul inIormation
is mentioned
The documents required Ior initial payment oI 60 include;
Original invoice
Change request Iorm
First part signed evaluation Iorm
The documents required Ior Iinal payment 40 include;
Original invoice
Change request Iorm
$igned twice evaluation Iorm

a) Parties to Letter of Credit (L/C):
i) Applicant (Opener): Applicant which is also reIerred to as
account party is normally a buyer or customer oI the goods, who has to make payment to
beneIiciary. LC is initiated and issued at his request and on the basis oI his instructions.
ii) Issuing Bank (Opening Bank): The issuing bank is the one which
create a letter oI credit and takes the responsibility to make the payments on receipt oI
the documents Irom the beneIiciary or through their banker. The payments have to be
made to the beneIiciary within seven working days Irom the date oI receipt oI
documents at their end, provided the documents are in accordance with the terms and
conditions oI the letter oI credit. II the documents are discrepant one, the rejection
thereoI to be communicated within seven working days Irom the date oI receipt oI
documents at their end.
iii) Beneficiary: BeneIiciary is normally stands Ior a seller oI the
goods, who has to receive payment Irom the applicant. A credit is issued in his Iavor to

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enable him or his agent to obtain payment on surrender oI stipulated document and
comply with the term and conditions oI the LC.
II LC is a transIerable one and he transIers the credit to another party,
then he is reIerred to as the Iirst or original beneIiciary.
iv) Advising Bank: An Advising Bank provides advice to the
beneIiciary and takes the responsibility Ior sending the documents to the issuing bank
and is normally located in the country oI the beneIiciary.
v) Confirming Bank: ConIirming bank adds its guarantee to the
credit opened by another bank, thereby undertaking the responsibility oI
payment/negotiation acceptance under the credit, in additional to that oI the issuing
bank. ConIirming bank play an important role where the exporter is not satisIied with
the undertaking oI only the issuing bank.
vi) Negotiating Bank: The Negotiating Bank is the bank who
negotiates the documents submitted to them by the beneIiciary under the credit either
advised through them or restricted to them Ior negotiation. On negotiation oI the
documents they will claim the reimbursement under the credit and makes the payment to
the beneIiciary provided the documents submitted are in accordance with the terms and
conditions oI the letters oI credit.
vii) Reim-ursing Bank: Reimbursing Bank is the bank authorized to
honor the reimbursement claim in settlement oI negotiation/acceptance/payment lodged
with it by the negotiating bank. It is normally the bank with which issuing bank has an
account Irom which payment has to be made.
viii) Second Beneficiary: $econd BeneIiciary is the person who
represents the Iirst or original BeneIiciary oI credit in his absence. In this case, the
credits belonging to the original beneIiciary is transIerable. The rights oI the transIeree
are subject to terms oI transIer.

-) Types of Letter of Credit:
i) Revoca-le Letter of Credit: A revocable letter oI credit may be
revoked or modiIied Ior any reason, at any time by the issuing bank without

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notiIication. It is rarely used in international trade and not considered satisIactory Ior the
exporters but has an advantage over that oI the importers and the issuing bank.
ii) Confirmed Letter of Credit: In case the beneIiciary submit their
documents in bank & on the spot receiving oI Iunds transIer conIirmation. Means no time
duration take place in conIirming Iunds transIer.
iii) Collection Based Letter of Credit: In this case the beneIiciary
bank conIirm the Iund transIer Irom PTCL, When PTCL conIirms aIter checking their
own records & accounts than the bank is releasing the Iunds.
iv) Irrevoca-le Letter of Credit: In this case it is not possible to
revoke or amended a credit without the agreement oI the issuing bank, the conIirming
bank, and the beneIiciary. From an exporters point oI view it is believed to be more
beneIicial. An irrevocable letter oI credit Irom the issuing bank insures the beneIiciary
that iI the required documents are presented and the terms and conditions are complied
with, payment will be made.

v) Collection -ased Letter of credit: In this type oI L/C, when the
beneIiciary submit documents to its bank than aIter collection oI Iund transIer documents
Irom the home bank, the beneIiciary is paid

vi) Confirmed Letter of Credit: ConIirmed Letter oI Credit is a
special type oI L/C in which another bank apart Irom the issuing bank has added its
guarantee. Although, the cost oI conIirming by two banks makes it costlier, this type
oI L/C is more beneIicial Ior the beneIiciary as it doubles the guarantee.

vii) Sight Usance (L/C): $ight credit states that the payments would
be made by the issuing bank at sight, on demand or on presentation. In case oI usance
credit, draIt is drawn on the issuing bank or the correspondent bank at speciIied usance
period. The credit will indicate whether the usance draIts are to be drawn on the issuing
bank or in the case oI conIirmed credit on the conIirming bank.


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viii)Back to Back Letter of Credit: Back to Back Letter oI Credit is
also termed as Countervailing Credit. A credit is known as back to back credit when a LC
is opened with security oI another LC.
A back to back credit which can also be reIerred as credit and counter
credit is actually a method oI Iinancing both sides oI a transaction in which a middleman
buys goods Irom one customer and sells them to another.
ix) Transfera-le Letter of Credit: A transIerable documentary credit
is a type oI credit under which the Iirst beneIiciary which is usually a middleman may
request the nominated bank to transIer credit in whole or in part to the second
beneIiciary.
x) Stand-y Letter of Credit: Initially used by the banks in
the United $tates, the standby letter oI credit is very much similar in nature to a bank
guarantee. The main objective oI issuing such a credit is to secure bank loans. $tandby
credits are usually issued by the applicant`s bank in the applicant`s country and advised
to the beneIiciary by a bank in the beneIiciary`s country.
xi) Import Operations under LC: The Import Letter oI Credit
guarantees an exporter payment Ior goods or services, provided the terms oI the letter oI
credit have been met.


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CHAPTER 6
SAP (ERP) & SOP


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SAP (ERP) & SOP
1) Introduction to SAP:
$AP ERP is a world-class, Iully integrated application that IulIills the core business needs
oI midsize companies and large organizations across all industries and market sectors. It
helps enterprises like yours manage Iinancials, human capital management, procurement,
logistics, asset management, and corporate services.
$AP stands Ior
$ystems
Applications
Products

$AP is accounting soItware having best security measures, as well as better output
results. All the transactions and entries are done according to delegation oI authority and
every employee is using their own modules.
The $AP ERP application provides the soItware Ioundation that large enterprises and
midsize companies trust to optimize business insight and enable operational excellence.
Leveraging this Ioundation, you can build the Ilexible business processes you need today
and tomorrow. With over 140,000 installations in 120 countries and 34 languages, $AP
ERP delivers the powerIul Iunctionality, global orientation, and Ilexible options needed
to gain a sustainable, competitive advantage and position your organization Ior proIitable
growth. Whether you Iace a single organizational obstacle or need to enhance business
processes Irom beginning to end, $AP ERP provides the business management solution
that meets your needs and scales Ior growth.
$AP ERP also enables organizations to eIIiciently manage their enterprise assets, such as
production equipment, tools, vehicles, and Iacilities. The soItware supports integrated and
comprehensive processes Ior asset planning, building, commissioning, operations and
maintenance, saIety and compliance, and real estate liIecycle management. By so doing,
it helps reduce operating costs; better manage capital expenditures; improve
environmental, health, and saIety perIormance; and optimize asset utilization.


$AP was Iounded in 1972. Now there are 2 versions oI $AP
$AP R/3
$AP ERP(using by PTCL since 2008)

ERP means Enterprise resource planning $AP ERP is designed to cater all the needs oI
an organization Irom various departments without any need to use additional soItware
applications.
$AP (ERP) maintains a central database Ior all the departments oI an enterprise like
Finance Department, Human Resource Department, Marketing and Business Operations
Management.

Another Ieature oI $AP is that, there is no need oI documentation Ior transaction that is
sent Irom Regions to headquarters but when an entry is posted the headquarters can
access those transactions.
Every PTCL`s employee has their own Login U$ERNAME & PA$$WORD, through
which he/she can access easily.

2) Working in SAP & SCREEN SNAPS:
The Iollowing are some descriptions and $AP screen snap;

a) SAP Easy Access:
Required User Input
Enter transaction code FAGLG'TR in the command line and press enter.


Discription:
There are diIIerent types oI transactions as shown in the above screen snap.
To enter a transaction we should click on the transaction given in the leIt oI screen or
Enter transaction code like FAGLG'TR in the command line and press enter.
-) Ledger:
Required User Input:
Enter 0L as ledger number, then press Tab.

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Description:
Only leading ledger is being used. The leading ledger is based on the same accounting
principle as that oI the consolidated Iinancial statement. It is integrated with all subsidiary
ledgers and is updated in all company codes. You must designate one ledger as the
leading ledger. In each company code, the leading ledger automatically receives the
settings that apply to that company code: the currencies, the Iiscal year variant, and the
variant oI the posting periods.

c) Company Code:

Required User Input
Enter 1100 as company code, then press Tab.

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Description:
The company code is an organizational unit within Iinancial accounting. Enter company
code 1100 Ior PTCL or 1300 Ior Paknet.

d) Fiscal year:

Required User Input:

Enter the Iiscal year, then press Tab.
Fiscal year may be 2008,2009,2010,2011 e.t.c

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Description:
Enter Iiscal year to which balances need to be carried Iorward.
e) Update Run:

Required User Input
Click on the execute button.

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Description:
Ensure that check box Test Run is not marked. Click execute button to start production
/ update run.
f) Log:

Required User Input

Read log to ensure that balance carry Iorward run is successIul.

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Description:
Read log to ensure that balance carry Iorward run is successIul.
$o, all the above $AP transactions are using but are maintained by ERP`s staII. There
may also arise a lot oI problems which can be resolved by ERP staII.


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) Introduction to SOP:
$OP stands Ior $ystematic Operating Procedure, a sort oI procedures used Ior the purpose
to prepare & identiIy a LIC (Location IdentiIication Code) Ior a location or network
where some working is in process.

4) O-ective of SOP:
Every Organization takes decisions based on the data available to it. $ame is the case
with PTCL. Two key issues being Iaced in this context are

Authenticity oI data
Challenge oI correlating data available in diIIerent systems.

A lot oI eIIort has gone in proper designing oI the systems being used in PTCL (mainly
ERP, BnCC, GI$ and CM$). However all systems are using diIIerent Nomenclature or
Coding $chemas Ior same Network Elements. Moreover it has become a dire need that
the data oI one system should be in sync with data oI other system.
Project data should be in $ync with Revenue so that IRRs could be assessed.
ERP/GI$ data should be in sync with NOC/CM$ data so that outage impact
analysis could be done.
BnCC Data should be in $ync with Provisioning data (speciIically Ior Broadband
and other new services) to avoid unnecessary complication.
There should not be any Capitalization and Asset Reconciliation issues.

$eamless integrating is not achievable unless a standard nomenclature / code was
implemented across the Iolds oI PTCL. These sorts oI codes are known as 'Common
Language Codes which are present in all databases Ior correlation.
A committee comprising oI members Irom all domains, Technical, I$ and Finance was
set up Ior creating a code which could be used across the board. The initial task was to

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code locations. The committee aIter through deliberation and studying number oI
international and national coding systems has Iinalized a location code Ior PTCL.
It is expected that this small step oI creating a uniIorm code across PTCL would have
historic positive impact.
) Code Format:
Code Basics

This 'Location Identification Code Ior PTCL is based on international best practices to
Iorm a standard which should be used in all databases in addition to the existing coding
schemas. This would minimize the manual eIIort required to correlate / integrate data in
diIIerent systems and Iollow the criteria given below.
$hould Iollow International $tandards.
$hould be oI $tandard Length
$hould Have $tandard Format
$hould be $imple and Human Readable
Could be accommodated in relevant systems (Minimum Length)
$hould not change over a longer period oI time.

Basic Code Format

The Iollowing Basic 5 Part Code Format has been Iinalized;

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All the codes using Ior LIC in $OP is predetermined & regions are making the new LIC
by above Iormat.
A new code has 11 alphabets or digits.
When the codes oI every location or network is made than everyone can trace every
location very easily.



CHAPTER 7
FINANCIAL ANALYSIS



Financial Analysis

1) Ratio Analysis:
Ratio Analysis is a widely used tool oI Iinancial analysis. 'It is the systematic use oI the
ratios to interpret the Iinancial statements so that the strengths and weaknesses oI the Iirm
as well as its historical perIormance and current Iinancial condition can be determined.
Ratios can be classiIied into Iollowing Iive broad groups.

1) Liquidity Ratio
2) Leverage Ratio
3) ProIitability Ratio
4) Activity Ratio
5) Market 'alue Ratio

1) Liquidity Ratio: Liquidity is a company`s ability to meet its maturing
short term obligation. Analysis corporate liquidity is especially important to creditors. II a
company has a poor liquidity position, it may be a poor credit risk.

Liquidity Ratios that are discussed Ior PTCL are.

a) Net Working Capital
b) Current Ratio

a) Net Working Capital: Net Working Capital is a saIety cushion to creditors. A
large balance is required when the entity has diIIiculty borrowing on short notice.

Net Working
Capital Ratio
Current Assets Current Liabilities
Total Assets

Year 2009
54,220,241

-

36,086,322


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154,048,079

Year 2010
45,450,236

-

30,192,778

150,767,727

$ince NWC oI the year 2010 is less than the year 2009, it indicates not in improvement
stage oI the company.

-) Current Ratio: The current ratio is equal to current assets divided by current
liabilities. The ratio is used to measure the ability oI an enterprise to meet its current
liabilities out oI current assets.

Current Ratio Current assets/ Current liabilities

Year 2009 54,220,241/36,086,322 1.50
Year 2010 45,450,236/30,192,778 1.51

The increase in the current ratio is a good indicator oI PTCL liabilities in earlier than in
previous year.

2) Leverage Ratio: Leverage is a company`s ability to meet its long term
obligations as they are due. An analysis oI leverage concentrates on the long term
Iinancial and operating structure oI the business.
$ome leverage ratios are.
a) Debt Ratio
b) Debt/Equity Ratio

a) De-t Ratio: The debt ratio compares the total liabilities to total assets. It

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shows the percentage oI total Iunds obtained Irom creditors.

Year 2009

54,658,520

154,048,079

033

Year 2010

54,658,520

99,389,559

033

-) De-t/Equity Ratio: The debt /equity ratio is a signiIicant measure oI
solvency since a high degree oI debt in the capital structure may make it diIIicult Ior the
company to meet interest charges and principal payments at maturity.

Debt/Equity Ratio Total Liabilities
Owners' Equity

Year 2009

54,658,520

99,389,559

033

Year 2010

20,816,238

99,758,711

021

) Profita-ility Ratios: An indication oI good Iinancial health and how
eIIectively the Iirm is being managed is the company`s ability to earn to a satisIactory
proIit and return on investment.
Total Debt Ratio Total Liabilities
Total Assets

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$ome major ratios are:
a) Net profit margin
-) Return on equity

a) Net Profit Margin:

ProIit Margin
Ratio Net proIit aIter tax
Total $ales
Year 2009
9,151,185

59,239,001

013

Year 2010
9,294,152

57,174,527

016

The decrease in this ratio indicates that business is earning less on each sales rupees.

-) Return on equity: It measures the rate oI return earned on the common
stockholders` investment.

Return on Equity
Ratio Net proIit aIter tax
Average Owners' Equity

Year 2009
9,151,185

99,389,559

9
Year 2010
9,294,152


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99,574,135

9

4) Activity Ratio: Activity ratios are used to determine, how quickly
accounts receivable are converted into sales or cash.
'arious ratios exist to measure the activity oI receivable, inventory and total assets. Here
activity oI receivable with its collection period is discussed.

a) Accounts Receiva-le Ratios:

The accounts receivable turnover ratio gives the number oI times accounts receivable is
collected during the year.

Accounts Receivable turnover Net Credit $ales/Average account receivable

The increase in this ratio in 2010 is a signiIicant and shows that credit policy oI the
company is good than in the previous year.

-) Collection Period:

It is the number oI days it takes to collect on receivable.

Average collection period 365/Account receivable turnover

Year 2009 365/48.36 7.54
Year 2010 365/47.94 7.61

With the substantial decrease in collection days in 2007, there is indication that customers

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balances are collective.

) Market Value Ratio: The Iinal ratio relates the Iirm`s stock price to its
earning per share. Here dividend related ratio is discussed.

a) Dividend Payout:
Many stockholders primarily interested in receiving dividend. Let`s see the
dividend payout ratio is signaling to its stockholders.

Dividend Payout dividend per share/ Carrying per share

Year 2009 3/4.07 0.74
Year 2010 2/3.07 0.65

It is the indication oI less dividends is paid in 2007 to its stockholders.

By examining the trend in the company`s ratios Irom 2009 to 2010, it is obvious that
overall position oI PTCL`s Iinance is excellent.
But iI we examine all the Iinancial ratios oI 2008 than that position is not so good Ior
PTCL


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CHAPTER 8
STRATEGIC ANALYSIS OF
PTCL


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STRATEGIC ANALYSIS OF PTCL

1) INTRODUCTION:
In the words oI Peter Drunker, any business, manuIacturing or service provider, is a
business owned by its customers. Because anything you produce or any service you
provide has to be produced or provided, viewing the customer`s choice and taste.
And thereIore it is concluded that the customer is the ultimate boss oI any business.
'This standing oI a business in a customer mind is known as the image oI that very
business.
Image oI any business is one oI the most important things Ior any type oI business.
Whether you want to produce something, want to capture a market, penetrate a
market, go globally or want to diversiIy the product line or lines, each and every
decision and strategy is taken and Iormulated keeping in view, how does the
business stands in customer`s eyes and mind? Or what is its ranking in customer
mind? A good quality product oI a bad image company or a company with new
existence would not sell it all or would not meet the standards or objectives and
goals but a poor quality product or a produced oI a Iair or medium (not super
quality) would sell like products oI super quality, 'Just because oI its image. But
customer`s image oI a product or products or oI a company is not 'the whole Iact.
Rather a company`s own management`s view about its own company or business is
also very important. The management oI a company, oblivious oI the Iact, where its
company or business stands in customer`s eye, could never make its company or
business popularized in customers and couldn`t develop its company`s or business
good or sound image. Only when the management would know its standing would
they strive Ior the development oI sound image and the business or company would
get customer acceptance.
How would the management know about its company`s or business standing? $o
many methods or adopted Ior that purpose. One such tool is called '$WOT
Analysis.


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2) SWOT ANALYSIS:
$WOT is a tool, used by the management oI a company (internally) to know; where does
its business stand? what is the present position oI a business? , what will be its Iuture?
What actions should be best alternative to be a successIul business?
The management by applying this tool comes to know about its strengths and
weakness, which is its internal environment.
When the management is knowing about opportunities and threats, which will be
external environment analysis
In the last couple oI years the impact oI deregulation and increase in competition in
telecommunication industry in Pakistan has been increasingly Ielt by PTCL. This
phenomenon is not unique to PTCL - incumbent providers all over the world have gone
through this diIIicult transition Irom being a monopoly to a Iree market competitor.
During the period under review, PTCL added net 108,000 new working connections to its
network. Overall, PTCL`s sales revenue Ior the Iirst quarter was Rs.16.9 billion as
compared to Rs.17.7 billion during the corresponding period oI last year.
.The company announced net proIit oI Rs 8.4 billion translating into an EP$ oI Rs 1.64
Ior the Iirst halI oI 2007, a decline oI 23 percent over the corresponding period`s net
earnings and EP$ oI Rs 10.8 billion and Rs 2.12 respectively. The major Iactor Ior the
decline in the top line was six percent downIall in the revenues Irom Rs 34.9 billion in
Iirst halI oI 2006 to Rs 32.7 billion in Financial Year 07 owing to rapidly declining
market tariIIs. $lide in proIit is a continuing trend . question is when would it be stable?
Investors do not welcome this uncertainty.
The management then, knowing its $WOT, Iormulates diIIerent types oI strategies, to
improve its image, standing or existing condition.
We will have to Iind Iour tools in $WOT analysis beIore designing and implementing
strategies so, Ior PTCL the Iollowing are the Iour tools oI $WOT;

a) $trengths


b) Weaknesses
c) Opportunities
d) Threats

a) Strengths:
The major strengths oI PTCL are given as under;
1. PTCL enoy an integrated monopoly:
$ince there is no competitor oI PTCL who are providing landline telecom services. PTCL
is also enjoying monopoly in internet services i.e. D$L (Digital $ubscriber Line), MAN
(Metropolitan Area Network) and also providing other internet services.
2. Leadership in the Market:
PTCL is leading company in the market, as it is sole and largest Telecommunication
services provider in Pakistan. PTCL aims at using the latest technology Ior its services.
PTCL is also inducting proIessionals in the Iield oI engineering and inIormation
technology. It is also getting consultancy Irom international companies in order to remain
leader in telecommunication sector.
. Largest operational network and infrastructure within ICT segment:
Ptcl have largest network operations in ICT (InIormation & Communication
Technologies) segment. And providing valuable products and services.
4. The Biggest Foreign Exchange Earner:
PTCL is the biggest source oI Ioreign exchange Ior Pakistan. Currently, it is earning more
than $400 million Irom its international traIIic. The international revenue is too much
thereIore there is designed a separate department oI International Revenue.
. Free From Competitive Pressure:


PTCL has no competitor in the market and other companies were legally not allowed to
enter into competition with PTCL beIore December, 2002 until its monopolistic status, 55
activities Ireely without any pressure.
Now the competitors are allowed but they have no any potential till now that they directly
compete PTCL.
. Adequate Financial Resources:
PTCL earns billions oI rupees as proIit each year and has enough money in its general
reserve. PTCL also has debt as a major source oI Capital. These adequate Iinancial
resources not only enable the company to cope with any unexpected event but to deploy
its resources to increase product line and services without Ieeling any Iinancial diIIiculty.
. Flexi-ility in Operations:
Because oI its adequate Iinancial resources and leadership in the market, PTCL has
Ilexibility in changing its operations, as customers have no alternative available.
Marketing department responds to the customers whenever they contact and ask
problems. $o, marketing and operations management departments act Ireely and
independently.
. Modern Technology:
PTCL is using modern technology to develop its products and services and to improve
the quality oI services. In this connection it has replaced the old exchanges with new
digital exchanges. It has developed computerized billing system. Due to this technology
thousands oI complaints has been reduced. PTCL has also entered in the business oI
Mobile phone and Internet services.
9. One of Pakistan`s Largest Corporations :
PTCL is one oI Pakistan`s largest private corporation have good returns on investment.
PTCL have Irequently top number oI index in K$E (Karachi $tock Exchange). PTCL
have about 4 million users in Pakistan having greeted revenues.



10.Strong research and development department:
To provide better services to its customers, PTCL designed a research & development
department in which high potential employees are doing research on diIIerent issues that
how their customers will be satisIying their needs and wants in telecommunication
industry.

11.Good Infrastructure:
PTCL have best inIrastructure that in which they are operating and providing the
products and services to their valuable customers

12.Experienced Telecom Recourses:
PTCL have experienced Telecom resources i.e. the devices like switches, modems and
other technology is all imported Irom the well known countries who are specialized in
that Iields.
1.One of Pakistan`s Consistently Profita-le Corporations
PTCL is providing its services to individuals as well as to the businesses. It is earning
high proIit margin Irom individual as well too much high Irom business because oI
providing services oI high quality.

14.Nationwide reach:
PTCL is reaching all over the Pakistan and all over the nation. Means providing its
services in every corner oI the country.

1.Most innovative services:
PTCL is providing most innovative services like the best telephony & high quality
internet services. PTCL is providing services through innovative devices and technology.



1.State of the Art International Gateway Exchanges & Satellite Earth
Stations:
PTCL have largest net work with its state oI art technology and new digital exchanges.
There are the some major important characteristics oI PTCL network.
O International $ubmarine Cables
O High Capacity National Fiber Optic Backbone Ring
O 36 Transit Exchanges with easy Facility oI Expansion
O About 99 Digitization oI Country Network
O $trong PlatIorms & Exchanges Ior 'alue added $ervices

1.Good Quality of international connectivity:
Because oI PTCL we can connect internationally with every country in sort oI seconds
with best quality oI voice.

1.Customer Base of over 4 million:
It`s the best strength oI PTCL that is having more than about Iour million customers and
PTCL is providing them their services at the spot oI the time at their door-steps.

19.Efficient chain of command. There is clarity of ~who answer to whom:
PTCL have designed an eIIicient and best chain oI command and centralization policies
that is very good in taking care oI their customers and the business tow whom PTCL is
dealing.

20.Good liquidity ratio:
As discussed in chapter 6, PTCL have good liquidity ratio. Means showing good position
in present while also Iorecasting good position in Iuture.

21.Offering round the clock service:
PTCL is providing round the clock services to its customers to ensure their satisIaction


round the clock services means providing the service when customers have need and they
want to IulIill their needs Irom PTCL. PTCL is providing 24/7 phenomenon i.e.
providing services 24 hours a day in every day oI the week.

22.Market leadership in Local loop, Wireless local loop (WLL) and Fixed
telephony:

2.PTCL (Ufone) is market challenger in GSM segment:
UIone is also a subsidiary oI PTCL, which is providing G$M services. UIone is
perIorming well though Warid, Telenor, Mobilink and Zong are tough competitor.
UIone`s proIitability increased by 49.2 percent to Rs 977 million in one Financial Year
2007 as compared to rsRs655 million in the corresponding period last.

24.Competitors still depend on PTCL network either directly or indirectly:
Competitors are still depending on PTCL in providing their services. II PTCL stop its co-
ordination than they will have to bear a lot oI loss.
2.MARINE OPTIC FIBER CABLE

-) Weaknesses:
PTCL is doing its business very well with high modern and sophisticated technology but
only to that extent to which customers respond. Although PTCL is generating revenue
Irom its value added services but it doesn't have any high potential competitor so it
cannot compare its perIormance and has no benchmark to gauge perIormance oI its
diIIerent departments.
Here are given some weaknesses oI PTCL;



1. Lack of Effective Controlling System:
PTCL has lack oI eIIective control on its employees, whenever, there exists discrepancy
between actual perIormance and expected perIormance oI an employee, and there is no
criterion to take corrective action to Iill the gaps. $o PTCL has no eIIective controlling
system to keep the activities oI employees on the track.
2. Less Earning From Its Su-sidiaries:
UIone and Carrier Telephone Industries are subsidiaries oI PTCL but PTCL is not
earning much Irom its investment oI nearly 313 million rupees which it has made in
capital oI its subsidiaries. $o PTCL is getting very nominal proIit Irom its investment in
subsidiaries.
. Customer Dissatisfaction and Delayed Responses:
Many customers oI PTCL are not satisIied with its services because oI wrong billing, late
delivery oI bills and delayed responses Ior any Iault in the Telephone. $ome customers
complain that they received their bills in Iull amount although they had stayed out oI the
home and had not used the telephone at all. Most oI the customers complain the wrong
attitude oI C$C (Customer $ervice $taII) when they call to them Ior any deIect in
telephone service.
4. Illegal Use of International Calls:
PTCL is using international call revenue in millions due to alleged illegal use oI
international calls. The dedicated international lines are provided to international banks,
Petroleum companies and Internet services providers (I$P's) Ior transIer oI data instead
oI voice communication. It was noticed that some I$P's were using the voice over
international phone technology commercially to Ietch overseas call revenue Irom
customers. Consumer wants to get beneIit Irom lower call rates, which are two third
times less than international call rates.



. Lack of Human Resources Management Lack of co-ordination.
PTCL has no human resource management department. It doesn't have clear policy
regarding hiring and training oI work Iorce. In PTCL, Ior most oI the jobs there is no job
description and Job speciIication. Due to this management oIten get conIused in
assigning work and evaluation oI perIormance oI employees.
. Lack of Training Program:
There is no proper training program to improve the skills oI PTCL's employees to cope
with ever-changing telecommunication sector. Less skilled and ineIIicient workers are
creating hurdles in its growth.
. Seniority Based Promotions:
PTCL is leading inIormation technology but it is not knowledge oriented so Iar as
promotions oI its employees are concerned. Promotions oI PTCL employees are seniority
based. Most oI employees, who get promoted on seniority basis, are less knowledgeable
& nonproIessional and can't cope with the challenges oI this ever-growing Iield. On the
other hand most oI its Knowledgeable and well-educated employees have no chance oI
getting higher positions. They have to work under their boss who has more experience
but less knowledge about inIormation technology and telecommunication.
. A-sence of Company Culture:
There is no inclusion or company culture and approaches among the oIIicers oI PTCL
and mostly their behavior with general public is still bureaucratic and their approach is
not objective or proIit oriented.
9. La-or Unions:
In PTCL the labor union is very strong. They go on strikes to IulIill their demands. This
leads to the wastage oI resources oI the organization.
10.Over-employment and low productivity in PTCL:


The numbers oI employees working in diIIerent branches are more than required. We can
say that there is over-employment. since, employees are more but their productivity is
very low.

11.Political influence:
Everywhere in Pakistan there is political instability, so PTCL is also inIluenced by
political instability and perIorming their operations in an eIIective way.

12.Misuse of PTCL`s resources -y its employees:
There is misuse oI PTCL`s resources like telephone, oIIice Iixture & Iurniture, telephone,
store items e.t.c.

1.Lack of internal audit control.:
The implementation oI rules and policies are not assured. All oI the policies set by
external auditors & board oI directors are not implemented in an eIIective way by internal
auditors.

14. Slow decision making:
$low decision making including external interIerences. The managers can`t take
decisions Ior the best oI the organization but they want to do secure their jobs.

1.Poor customer services:
PTCL`s customer service is too weak because there is lack oI technical staII especially
when there is contingent situation than it takes too much time.
PTCL`s employees are not been able to nurture its growth around customer services
oriented strategy.
Its image in customer`s mind is lack oI customer Iocus.
1.Ina-ility towards resource utilization:
There are large number oI resources like; Pak-net, the internet service provider arm oI
PTCL customers to incur losses due to poor management and lack oI network


optimization. Ptcl-v, the Iixed wireless phone service is also very poor.
1.A-sence of technical staff especially -road-and DSL
PTCL`s technical staII has outdated people and they have lack knowledge about
technology.
Especially broadband D$L have lack staII & the complaint oI a customer can`t be recover
with eIIiciency.

c) Opportunities:
1. Entering the New Market:
PTCL can expand its business by exploring and entering new markets like cellular mobile
services expansion.
2. Telecom Facilities In Rural Areas:
All the value added services and digital Iacilities are available only in the main cities oI
Pakistan. PTCL can expand its business by providing telecom Iacilities in rural areas
where potential customers do exist. In this way, PTCL, domestically, can get more
market coverage.
. Addition to the Product Line:
Top management oI PTCL can make additions to its existing product line by providing
more services. In this way, PTCL can increase its revenue and customer satisIaction. This
requires market research i.e. what the customer wants and what is the need oI market
with innovative technology.
4. Vertical Integration:
PTCL can create a level oI coordination among its operations. PTCL can make itselI selI
suIIicient and can reduce the transportation costs oI transIerring technical instruments
and machinery Irom one place to another.


. Increasing Awareness Rate:
PTCL can show its interest in educating people and increasing the literacy rate. In this
way, PTCL will not only IulIill its social responsibility but will also be able to increase
awareness rate and it will be help Iull in the expansion oI PTCL business.
. Faster Market Growth:
PTCL has the opportunity to increase its market growth. PTCL can do this by quickly
responding to changing business environment and by the use oI new technology.
. Satellite communication:
PTCL can start satellite communication, which result high customer satisIaction as well
as cost-eIIiciency.
. Making investment decisions:
PTCL should make investment decisions by investing its Iinancial resources in diIIerent
markets.
9. Employees training programs:
PTCL should train their employees in routine; by training employees there are two
beneIits, one there will be more organizational loyalty and the other is that there will be
change in employees perIormance.
10.Hiring of qualified HR Staff:
PTCL should recruit high potential HR and administrative staII, and also they should be
oIIered with high renumeration.
11.Technological advancement:
All the technology should renewed and the latest technology should be replace by the
oldest. Like replacing landlines by wireless systems.
12.Computerized system:
All the system should be computerized and system generated, like BnCC (Billing &
Customer $ervice).
1.Low tele-density in Pakistan:


In Pakistan there is less number oI operators in telecom sector. ThereIore PTCL should
exercise strategies Ior 'to better one amongst them.
14.Introduction of High Value Added Products :
Opportunity to introduce high margin products Ior the new and more aware consumer.
Means high quality always have high worth oI prices.
1.Scope for efficient/cost effective operations:
PTCL should do their cost-beneIit analysis oI every service and their every cost insertion.

1.Partnership with new entrants in a deregulated environment:
PTCL should merge its products & services in a combined with some potential partners.
1.Glo-al connectivity relia-ility has -een improved:
PTCL should connect its operations globally like call rates are higher to the GulI as
compared with Europe, so they should do something Ior reducing communication
channel cost to the GulI.
1.More aware and technology understanding consumer:
A base that is growing at a Iast rate is that awareness oI consumers about technology. The
customers should guide to diIIerentiate between high and low beneIit products &
services.
19.Time to esta-lish -rand loyalty, anticipate competitors:
Its better time Ior PTCL to establish brand loyalty oI customers and anticipate
competitors by inviting partners and high potential investors.
d) Threats:
All the threats are external but some oI them are controllable while some are
uncontrollable.
The Iollowing are some major threats Iacing to PTCL by external environment;
1) Competitors:
Competitors are the barriers against the development oI PTCL. Every telecom company
wants to make resistance in the way oI PTCL, means resistance Ior its success. Like,
Wateen is although a new in the industry relevant to PTCL, but their advanced


technologies can impose a potential threat on PTCL

2) Economic conditions:
In strong economic conditions the growth oI business is very Irequent. The poor
economic conditions increase the inIlation rate, which is a threatening Iactor Ior PTCL.
And now a days the economic conditions are very tough.
) Political Climate:
Political climate in Pakistan is very uneasy because oI regional tensions, which may have
a detrimental eIIect on potential investment Irom overseas and consequently network
expansion. Because oI political instability regions can`t work in an eIIective way.
4) Expected Entry Of Competitors:
PTCL maintained its monopoly till the year 2002. But aIter this time all business
organizations will be allowed to enter the market in competition with PTCL. Hence end
oI monopoly and entry oI new competitors become a challenge Ior PTCL.
) Decreases in Market Share Due To Competition:
AIter the end oI monopoly, dissatisIied customers shiIt to those telecom services
providers who they think would oIIer better services than the PTCL, and will increase
customer satisIaction. Decrease in market share would decrease the proIitability oI
PTCL, which will be a real threat in near Iuture.
) Slow Market Growth:
Although PTCL is the biggest earning company Ior Pakistan, but it requires continually
increase in its market share. $low market growth will be a challenge Ior PTCL as it has
Iavorable market opportunities Ior growth by eIIicient utilization oI its work Iorce.
) Government Legislation:
Government policies can aIIect the perIormance oI PI'CL. Hence government policies
will be a real threat Ior PT'CL, iI they are not in Iavor oI PTCL business activities than


they may impose diIIerent uncertain rules Ior telecom sector. Inconsistent policies oI
governments regarding the nationalization and denationalization
) Exchange Rate Risk:
Exchange rate risk will cause PTCL a net exchange loss on Ioreign loans. Devaluation oI
rupee will increase the cost oI production, machinery and almost all the equipment,
imported Irom Ioreign countries. $o exchange rate risk will aIIect the proIitability oI
PTCL and also increase the risk oI getting Ioreign loans in Iuture.
9) Migration to Cellular Networks:
Every customer has a cell phone and everyone wants to mobilize their selI. $o, the
landline & wireless business oI PTCL is going towards down.
10)Increase in Cost:
There is a sudden & dramatic increase in cost, cost may be Iixed or may be variable but
there are value is increasing towards sky.
II the cost oI a service is increased the PTCL will have to charge high prices, thereIore
customer loyalty will be decreasing.



CHAPTER 9
CONSEQUENCES



CONSEQUENCES
1) FINDINGS:
The internship program means that students should know that how someone handles
issues practically during his working. $ince my internship program have the objectives to
know the potential problems & issues Iacing to the PTCL and how the PTCL staII is
handling all the issues Iacing to the PTCL.
All the issues I Iound in PTCL, during my internship are given as under;
a) The Li-eralization of Telecom Sector:
The past couple oI years have been one oI the most eventIul in the history oI Pakistan's
telecom sector. Liberalization oI the sector ushered in an era oI competition Ior all the
telecom players oI the country and brought to an end the monopoly status oI PTCL. The
management oI PTCL was prepared to Iace the challenges brought in by the liberalization
oI the telecom sector. They were equipped to preserve PTCL's position as the market
leader and to build on its revenue streams. $everal structural changes to the organization
were initiated at that time and others are still underway. Retention oI present customers
became the prime Iocus oI PTCL's attention, while at the same time PTCL was
competing Ior new customers to broaden its customer base.

They took steps, which made telephony more accessible and aIIordable than ever beIore.
There has been a record reduction in tariIIs, collaboration with the private sector trebled
and value added services increased by a large number. Upgrading oI inIrastructure
continued throughout the year aIter the introduction oI liberalization policy. Many new
services and technologies were successIully introduced and many more.
-) PTCL's privatization:
The news oI PTCL's privatization, on June 18, 2005, and the price that it managed under
the hammer created the best economic scenario Ior the privatization process that was
possible. The deal, many considered beyond expectations. The Etisalat, United Arab


Emirates' communication sector giant, also holding business interest in the international
Iinancial markets, made a bid that was much over and above the other bidders and thus
gained a 26 percent stake in PTCL with management control, by committing an amount
oI U$$ 2.6 billion.
The Etisalat was also in better position in GulI, but here in Pakistan they also need a Iull
concentration that they win their customer`s mind, means to position their organization in
the mind oI PTCL`s customers.
Hence, the Etisalat started the management oI PTCL Irom april12, 2006.

c) PTCL is a telecom foundation:
$ince, PTCL is a telecom Ioundation Ior all the other Telecom companies like Telenor,
Jazz, Warid, Zong e.t.c.
PTCL is also having largest network operations in ICT (InIormation & Communication
Technologies) segment and providing valuable products and services to its customers.
d) Better financial position:
PTCL has the better Iinancial position in Pakistan. Having about 80,000 Iixed assets.
According to the annual report oI 2010 PTCL is having PKR 150,767,727 oI total assets.
e) High level investments:
PTCL is doing high-level investments in long-run projects. It is providing landline
and Iixed line telephony services in Pak
$AP ERP is also a high level investment in the organization which result the work
positions eIIiciency.
f) Accounting Software:


PTCL is using a best well-know & best eIIicient accounting $oItwares like $AP, $EGA,
QuickBooks, Peachtree e.t.c.
In these soItwares every authority is delegated to everyone according to his job position.
Especially in $AP there are diIIerent modules and every employee can use the module Ior
which he has their own login or authority.
g) Efficient Staffing:
PTCL is a sensitive organization because it is second largest company in Pakistan, so the
oIIicers recruited they have the knowledge oI know-how oI Accounting, Economics,
Financial Administration and procurement etc.
All the oIIicers are on contract base and they need to work eIIiciently to secure their jobs
positions.
h) Decentralization:
All decisions are made at higher level in PTCL. It adversely aIIects the morale oI
employees and delays the process oI decision making.

i) Workload:
There are Iew oIIicers who are overloaded while others are sitting idle most oI the time.
And when a person is provided a work load more than his power than he may do it with
his ineIIiciency.
) Auditing:
The registered auditors oI PTCL are M/s A. F. Ferguson & Co. and Ernst & Young Ford
Rhodes $idat Hyder, both the auditors are very well-known in their Iields.

k) High salaries:
PTCL is providing high salaries to its staII Ior the purpose to motivate them towards their
working in PTCL.
l) Revenue consumption:


The revenue may be local or international but is not directly consumed in regions
or in HQs. While it is allocated through a proper budgeting system.
The revenue is calculated by BNCC is budgeted to capital expenditures and
operating expenditures by budgeting department oI PTCL.
m)Better management of PTCL:
The management oI PTCL is very eIIicient and good. The authority is delegated
according to the knowledge and experience oI every person.
There is better management and better PerIormance appraisal in PTCL thereIore PTCL
is receiving their employee`s co-operation.

n) Better environment:
PTCL is providing better environment to its employees either they are in headquarter or
in regions.
o) Corporate customers:
PTCL is providing there telecom services to individuals as well as to corporate or
business customers.



2) CONCLUSIONS:
The PTCL Company maintains a leading position in Pakistan as an inIrastructure
provider to other telecom operators and corporate customers oI the country. It has the
potential to be an instrumental agent in Pakistan`s economic growth.
PTCL has laid an Optical Fibre Access Network in the major metropolitan centers oI
Pakistan and local loop services have started to be modernized and upgraded Irom copper
to an optical network.
On the Long Distance and International inIrastructure side, the capacity oI two $EA-ME-
WE submarine cables is being expanded to meet the increasing demand oI International
traIIic.
This coincided with the Government's competitive policy, encouraging private sector
participation and resulting in award oI licenses Ior cellular, card-operated payphones,
paging and, lately, data communication services.
The privatization oI the company was completed in the Financial Year 06, Iollowing the
purchaser oI 26 B` class ordinary shares by Etisalat International Pakistan L.L.C.
Etisalat International Pakistan (EIP) took over management control on 12
th
on April
2006.
No doubt PTCL is having the monopoly in providing the Land-Line Telephone
Connection in Pakistan and is playing its role magniIicently. In current scenario PTCL
has increased its Revenue quite dramatically and probably because oI taking over oI EIP.
PTCL accounting and Iinancial system Ior planning and controlling activities are
satisIactory. But it needs the strict implementation oI its policies. In Iinance they are
using too much costly soItware known as $AP (ERP) through which the need oI
documentation become less and no need Ior more time in audit.


Another good policy oI PTCL is that every person is responsible Ior his own task; means
iI you are an employee in PTCL than you have to do work on time, otherwise it may
cause bad eIIects on perIormance appraisal.
Privatization oI the company improved the working oI organization and its overall
eIIiciency. New partnership Etisalat enhanced PTCL status in the Telecom sector and
Iurther strengthened the existing strong bands oI Iriendship between Pakistan and UAE.
To keep the leadership position in the Telecom sector, it is important that PTCL
continuous to set high standards Ior the others to emulate. PTCL have come a long way
and have a long way yet to go but it is committed to 'making it possible.

) RECOMMENDATIONS:
Because oI liberalization oI telecommunication in Pakistan PTCL should plan their
policies and management styles so that all the customers and employees are Ieeling good
to be aIIiliate oI PTCL.
Instead oI vertical expansion, PTCL should try to observe horizontal expansion because a
supervisor with 5 subordinates can better complete tasks and duties than a supervisor
with 10 students.
At Iunctional level, there is no co-ordination among the diIIerent units oI diIIerent
departments. In order to motivate the employees and insure that sound communication is
taking place in the organization and that no grape vine element or rumors prevail.
$ince all the oIIicers are on contract base, PTCL should do long term plans Ior eIIective
results and PTCL should make them permanent employees and they should pay them
various Iringe beneIits.
PTCL, as we have discussed in the strategic analysis, is losing a good portion oI its
market due to line rents which a person has to pay whether he makes a call or not. This
rent should be eliminated, at least experimentally, and I hope that PTCL`s management
will Iind that that had not made a bad decision.
Innovation is a key to success in today`s businesses and PTCL has no exception. The
increasing competition makes it imperative Ior PTCL to innovate. II it could be possible,


they should try to bring some mobile phone Iacilities into the Iixed phones. Innovative
service techniques must be sought and Iollowed.
Internal analysis is must Ior value creation and value addition. $o internal analysis must
be done. And two alternatives must be matched in light oI relative opportunity cost.
Positive re-enIorcement oI employees is a pre-requisite Ior good Ilow. $o employee`s
demands should be accepted and they must be positively rewarded as they deserve it.
PTCL`s subsidiary mobile phone company 'U-Ione is with tough competition with other
mobile companies and is having good handsome market under it but that`s not too good.
The other issue is that it`s advertising; And PTCL`s own advertising policy is not too
good. $howing ads to many times consecutively leave bad impression and this claim is
based on experience and customers views so it should be avoided. I would like to suggest
PTCL should not to show ads with ambiguities. $o the advertising policy should be
revised.

PTCL should do survey on consumer satisIactions and they should identiIy all the needs
& wants oI potential customer. PTCL should provide all the services without any
discrepancy, like PTCL is providing Broadband D$L Iacility only in urban areas while
there is no Iacility oI internet in rural areas. $o when they are launching a new product or
service they should introduce it everywhere in Pakistan as per the positioning.

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