Governance

Issues in PTCL
and Ufone
Presented by:
Dur-e-Shehwar (sp21-bba-004)
Hifza Kiran (sp21-bba-005)
Sawaira Naz (sp21-bba-013)
Mamoona Fatima (sp21-bba-024)
 Outline

Governance Proposed
PTCL Ufone Solutions
Issues
 PTCL
Pakistan Telecommunication Company Ltd. is the national
telecommunication company in Pakistan. PTCL provides telephone
and internet services nationwide and is the backbone for the
country's telecommunication infrastructure. The corporation
manages and operates around 2000 telephone exchanges across the
country, providing the largest fixed-line network.
Products:
With the largest fixed line network of the country, PTCL offers
products and services like high speed Broadband internet, CharJi
wireless internet, Smart TV (IPTV) service and over-the-top (OTT)
applications.
 PTCL Timeline

1947 1962 1995 1996

Pakistan About 5% PTCL formed
Post and
Telegraph and PTC assets and listed on
Telegraph
Telephone transfered all stock
Department
Department exchanges

1998 2000 2003 2006

Mobile and Telecom Telecom Etisalat takes
Internet Policy Deregulation over PTCL
subsidiaries finalized policy management
established announced
 Ufone
Ufone is a telecommunications company established in 2001and is a
subsidiary of PTCL. As a result of PTCL's privatization, Ufone became a
part of the Etisalat in 2006.
• Services
Ufone provides a range of services including voice calls, SMS, mobile
internet, and value-added services such as mobile banking and
entertainment.
• Market Position
Ufone is one of the leading telecommunications companies in Pakistan,
with a significant market share. It has a strong presence in both urban and
rural areas, offering reliable and affordable communication services to its
customers.
 Governance Issues in PTCL
● Inappropriate Privatization:
PTCL's privatization, despite being a highly profitable organization, raised
concerns about the logic behind transferring management control to an
acquirer unfamiliar with Pakistan's organizational culture.
● Under Valued Assets:
Independent sources revealed that assets like Ufone and PakNet were
undervalued, making PTCL's sale a major failure in corporate governance.
● Employee Well-being:
Employees in PTCL are under great stress of heavy workload and are under
poor safety climate leading to accidents
● HR Crisis:
Following privatization, PTCL underwent rightsizing and downsizing, with 32,000
employees leaving through a VSS. The loss of experienced staff negatively impacted
network maintenance, customer care, and operations, leading to a significant drop in
connections. The betraying role of worker unions resulted in reduction of employee
commitment. Their power was further minimized by the management.
● Financial Performance:
Post-privatization, PTCL's financial performance deteriorated. Profits declined from
Rs 27 billion to Rs 11 billion with a negative growth rate of 21% during the years
2005 to 2009. The government's interference, including pressuring for a substantial
dividend payment, led to a failure to invest in technology and strategic development
by the ambiguous sale. However, PTCL has been earning huge profits as of recent.
 Governance Issues in Ufone
● Lack of Transparency:
The company has been criticized for its lack of transparency and accountability in its
business operations. This makes it difficult for stakeholders to assess the true financial
health and performance of companies.
● Conflict of Interest:
Another major issue is the prevalence of conflict of interest among corporate executives
and board members. This results in decisions that prioritize personal gain over the best
interests of the company and its stakeholders.
● Weak Organizational Structure:
Poor organizational structure due to presence of initial management from Paktel and
Mobilink and later management from Warid. Pakistan's regulatory framework for is
relatively weak, allowing these issues to persist.
● Weak internal control:
Ufone's internal controls are not robust, which increases the risk of fraud and financial
mismanagement. This can result in financial losses and damage to the company's
reputation.
● High Turnover rate:
Due to lack of proper advertisements of jobs, they are unable to grab talented employees
and facing high turn over rate. And are not able to meet excessive public demand.
 Proposed solutions
● Enhance Transparency and Accountability:
Implementing clear policies and procedures, conducting regular
audits, and ensuring that decision-making processes are fair and
unbiased. As well as disclosing details of the deals to the public
and relevant stakeholders
● Asset Valuation Transparency:
Establish an independent body for accurate and up-to-date
valuation of assets before privatization. Mandate transparency in
the valuation process, disclosing methodologies and ensuring
alignment with current market conditions. And reassess
privatization criteria.
● Employee Welfare:
Develop a strategic plan for skill retention and smooth integration. Minimize the
difference in employee-manager work expectations. Prioritize employee engagement and
training programs to create a strong corporate culture.
● Financial Performance Monitoring:
Establish mechanisms to monitor the post-privatization financial performance,
comparing it with pre-privatization benchmarks. Implement regular audits to ensure that
they dont engage in practices detrimental to the organization's financial health.
● Strengthen Board Oversight:
Reinforce the authority and independence of the board of directors, ensuring they have
the power to scrutinize and challenge privatization decisions. Promote a diverse and
knowledgeable board to enhance strategic decision-making.
 Conclusion
Before privatization, PTCL was major corporate enterprise
and revenue contributor to the Government. PTCL was doing
fine in compliance to revenue earning and providing
employment. Through various training institutes, PTCL was
producing large number of highly skilled telecom engineers
and technicians.
The strategies with regard to corporate level, business level
and marketing are still now mainly focused on financial
performance. Instead of hasty privatization, what PTCL and
Ufone needed was proper corporate governance through
accountability, transparency, integrity, corporate ethics and
executive control.