ACKNOWLEDGEMENT

Thanks to Almighty Allah for giving me knowledge, power

and strength to accomplish this task. We learned a lot
while doing this project and this will certainly help me in
our forth coming life. Many friends of me helped me
during this project but I have no claim of perfection but
have tried my level best to accomplish it. With a deep
sense of gratitude I extend my thanks to my teachers and
administration of Allama Iqbal Open University who
provided me this opportunity to learn practically, who
helped me in all the phases of this project. We are also
very thankful to the Management of NTC for supervision
and help during the times of difficulties.
In the end I would like to thank all of my teachers and
friends for their support and encouragement. Finally my
special thanks to my family for their never ending support
during this time period.

May Allah help me for applying that I have learned during my

internship.

LIST OF CONTANTS

1
Particulars

Page

1 Introduction

2 Objectives of Studying the Organization 10

3 Overview of the Organization 11

3.1 Brief History

3.2 Nature of the Organization

3.3 Business Volume

3.4 Number of Employees

3.5 Product Lines

4 Organizational Structure 20

4.1 Main Offices

4.2 Comments on the Organizational Structure

5 Structure of the Finance Department 22

5.1 Number of employees working in Finance Department

5.2 Finance & Accounting Operations

6 Functions of the Finance Department 31

6.1 Accounting system of the organization

6.2 Finance System of the organization

6.3 Use of Electronic data in decision making

6.4 Mobilization of Funds

6.5 Generation of Funds

6.6 Sources of Funds

2
 6.7 Allocation of Funds

7 Critical Analysis 43

7.1 Financial Analysis (ratio analysis, horizontal & vertical analysis of

the organization of the last five years)

7.2 Organization analysis with reference to the industries listed on the

stock exchange

7.3 Behavior of the studied organization in allocation of various funds

to different assets

7.4 Future prospects of the organization

8 Shortfalls/weaknesses of the Finance Department

57

8.1 Critical analysis of the management patterns of the organization

with reference to financial operations, weak areas that need to be

improved

9 Conclusions & Recommendations for improvements

59

10 References & sources used

11 Annexes

62

A). Number of Employees at NTC

B). NTC Organizational Chart

C). NTC Finance Wing Organizational Chart

3
LIST OF TABLES & ILLUSTRATIONS if any

The following tables, graphs and Diagrams are included in the report:

Particulars Page

1. Telephone Billing Trend Graph 14

2. Telephone Billing vs Collection Graph 15

3. PERN Diagram 18

4. Finance Department Employees Table 23

5. Telephone Revenue (Region Wise) Table

37

6. Telephone Revenue (Per Fixed Line) Table

38

7. Revenue Sources of NTC Table 39

8. Interconnect Revenue Table 40

9. NGN Diagram 51

4
 EXECUTIVE SUMMARY
National Telecommunication corporation was established on 1st
January 1996 vide Pakistan Telecom (Re-Organization) Act 1996 to
provide Telecommunication services to GoP departments formally
carried out by Pakistan Telecommunication Corporation. NTC to
meet the present demand of current era realize changing
environment. The telecommunication usage is increasing
worldwide at a faster pace and at the same time, analog
microwave system is facing out with digital media. NTC Data
Network for E-governance/ commerce has started functioning with
a number of services ISP, intranet and certain value added
services. The corporation is also shouldering certain significant
Government projects chiefly PAKSAT, and education intranet,
Moreover, the corporation has successfully established its MIS
department, which has now started NTC in house billing.
Financially NTC showing improvement its operating expenses have
been kept minimum level by properly analyzing requirements and
streamlining functions. Emphasis is given on preventive
maintenance plan, to keep the vital assets of NTC in proper
working condition. Efforts are made to keep the corporation lean,
new induction of essentially required staff is made only.
The corporation is fully alive about the training and development
of its staff. Finance and Administration functions are also being
manned through professional qualified staff to run the corporation
on true corporate lines.
Telecommunication sector in Pakistan is pioneer to experience the
open market competition. All business activities and strategies
revolve around the consumer needs and goals are set to meet
5
demands to the best of their satisfaction. It understood that quality
of service and tailor made products, matching to different
customers needs, at competitive rate, will be the hallmark of
success.

6
 INTRODUCTION

The new era of telecommunication in Pakistan has brought several

challenges with it, despite of the advantages it has made visible for the
consumers. The most important being the challenge to keep intact the
security requirements of the GoP (Government of Pakistan) and to
protect the new players in this field from the conventional practices of
the incumbent operators to protect their market share. To overcome
these challenges GoP established National Telecommunication
Corporation (NTC) in January 1996 under the Telecom Reorganization
Act 1996.
The main objective was to have an infrastructure independent of all
other operators that can be used for the purpose of government
communication and as an alternative support for the operators entering
the market.

Progress From start to date: The ongoing infrastructure

development journey for NTC began in 1996 when it was created with
few local exchanges and analog microwave. However, today NTC has
developed its own infrastructure to an extent where it can be called an
independent IT and telecom operator capable of meeting the challenges
of the deregulated environment and meeting the objectives for which it
was created. NTC started its operations in 1996 with only 5 local
exchanges all over Pakistan and an analog microwave link not capable
of supporting the digital transmission. To carry out its operations, it was
mainly dependent on PTC infrastructure and used its transit network,
international gateways, transmission network, IN platform etc. to carry
out its operations. The copper network in the access provided to NTC
was not sufficient to cater for its subscriber base and meet the required
quality of service parameters. NTC had no arrangements for direct

7
interconnect with cellular operators as a result it had to pay substantial
part of its revenues to PTCL for 3rd party termination. Data services
being essential demand of NTC customers could not be met due to non
availability of infrastructure. Billing of NTC customers was carried out
through PTC initially and through Pakistan Computer Bureau. The main
challenge for NTC at that time was to reduce this dependency on other
operators to minimum as soon as possible to fulfill its obligations and to
sustain itself in the deregulated environment in which PTC was to be
privatized. The main focus in the initial years was to develop its own
basic infrastructure that included optical fiber transmission backbone,
transit network, billing system and multi services data network (MSDN)
beside expansion of its switching network to un-served areas to cover
as much of its subscriber base as possible. It purchased 2 fibers from
PTC in the main optical fiber backbone and equipped it with 622 Mbps
SDH system. It expanded its exchanges in different cities to gain access
to its customers along with laying of copper cable. These exchanges
were converted into transit exchanges to provision long distance
services on NTC network and to have direct interconnects with cellular
and other operators. The establishment of NTC MSDN was a major
milestone, achieved in 2001 which enabled NTC to provide multiple data
services such as dial- up, DSL, Web hosting and internet etc. to its
customers. Another milestone achievement in National history is in
placement of Pakistan education & Research Network (PERN) project.
The project is providing 155 Mbps international connectivity to 59
universities connected all over Pakistan. The billing system was
developed in first 4 years which made it possible for NTC to do its own
billing.

8
OBJECTIVES OF STUDYING THE ORGANIZATION

The purpose of the study is to make sure this publication

understandable to its readers by giving the overview of the organization

in detail it is also descriptive in nature through which one can

understand the working of a government owned corporation i.e.

National Telecommunication Corporation. During the internship special

emphasis has been given to the Finance Department of NTC. The main

objectives of studying NTC are as follows:

i). Studying the functions/affairs of the finance department.

ii). To see how strategic decision are made in a practical setting.

iii). To observe the task and authority relationship, existing in the

organization

iv). To relate the theoretical concepts with the practical framework.

v). To analyze the structure of the finance department with respect to

number of employees and finance and accounting operations.

vi). To study the overall structure of organization.

vii). To practically see the funds, managements, mobilization of funds,

generation of funds, and allocation of funds.

9
OVERVIEW OF THE ORGANIZATION

7.1Brief History
National Telecommunication Corporation (NTC) was established on
January 01, 1996, vide Pakistan Telecommunication (Re-organization)
Act, 1996 to undertake the telecommunication business in respect of
the government departments formerly carried on by the Pakistan
telecommunication corporation (PTC). The business was transferred to
the Corporation w.e.f. January01, 1996, gradually under the Pakistan
Telecommunication (Re-organization) Act, 1996. From this date the
corporation, took over the properties, rights, assets, obligations and
liabilities of PTC as specified in the Vesting Order issued by Ministry of
Communication. Government of Pakistan Gazette Notification No.1209
(I)/95 dated December 31, 1995; the Corporation commenced its
business on January 01, 1996. The corporation was engraved of PTC and
the assets equivalent to Rs. 5,143 billion were transferred to NTC.
Statement showing the details of Assets and Liabilities taken over at the
incorporation is presented at that time is at Annex-15.1

7.2 Nature of Organization

As per section 41 (3) of Pakistan Telecommunication (Re-
organization) Act, 1996, the Pakistan Telecommunication Authority
(PTA) has granted a license to the National Telecommunication
Corporation for the provision of telecommunication services within
Pakistan to the Armed Forces, Defense Projects, Federal Government,
provincial Government or such other Governmental agencies or
Government institutes as the Federal Government may determine and
during the exclusivity period of the Pakistan Telecommunication
Company Limited (PTCL) specified in section 39, of the aforesaid Act,

10
the NTC shall not sell its capacity on the telecommunication system to
any person other than such Government agencies.

Basically NTC is a Government owned corporation in which financial

practices exhibit it as a true public sector corporation. NTC is a
developing organization and most of its processes & operations are in
the phase of being re-engineered. As far as the decision making is
concerned, right now, top-down decision making approach is being
followed. In administration its own Standard Operating Procedures
(SOPs) are followed

7.3 Business Volume

NTC has annual business volume of about Rs.300 billion. It is pertinent
to mention here that from the business volume point of view, Islamabad
Region (out of five NTC regions i.e. Islamabad, Peshawar, Lahore, Quetta
& Karachi regions) is generating about 37% of total revenue while
Lahore region contributes 26 % and other regions are generating
remaining 37% of total revenue. Following are the major sources of its
revenue:-

• Fixed line connections.

• Media (MW, DRS, OFS, PCM, Carrier) services.
• Internet, MSDN services.
• PTV Transmission.
• Services for Mobile operators.
• Gateway services for International communication.
• Services for PERN project

Being public sector clientele, NTC has to face a great deal of difficulties
in recovering dues from different Government departments. However,
its revenue section is leaving no store unturned to come up with flying
colors.
11
NTC business volume is likely to touch the zenith when most of the
embassies will be provided telecommunication facilities by NTC. In this
regard, Director NTC region Islamabad is trying its best to shift all those
connections installed for embassies through NTC network. It is pertinent
to mention that currently PEMRA has granted licenses to 50 new TV
channels, thereby, it will call far usage of NTC infrastructure to facilitate
their transmission.
7.4 Employees Profile
Presently, total numbers of employees working in NTC are 3003. Detail
description is provided at Annex-15.2 at the end.

7.5 Product Lines

NTC being a service oriented organization is offering following product
lines:-

• Fixed Line Connections

As the name implies, the services of telephone connections being
rendered to NTC valued subscribers through cables come in the
category of fixed line connections. It is a major source of NTC revenue.
Telephone Billing Trend
3000
2610.51
2345.8
2500
1968.94
Rupees in Million

2000 1642.97

1500 1151.65

1000

500

0 12
2001 2002 2003 2004 2005
To provide Telecommunication Services of all kinds, only to the NTC
designated customers (i.e., armed forces, defense forces. Federal
Government, Provincial Governments, other Government agencies and
Government institutions as the Federal Government may determine
through out the licensed territory. To provide National and International
Telecommunication system to the Ministry of Foreign Affairs, Intelligence
Bureau and Inter Services Intelligence Directorate of the Government of
Pakistan. To operate, develop, extend and maintain through out the
licensed territory such telecommunication system as may be required
for the provision of licensed services.

2800
2610 2659
2600
2400 2346
2294
Rupees in Million

Telephone Billing vs Collection

2200
1969 1924
2000 Billin g
1800 1643
1548 Colle ction
1600
1400 1152
1200 1178
1000
800
2001 2002 2003 2004 2005

To sell or lease trunk capacity only to NTC designated customers or to

the Company during the seven year exclusivity period, beginning from
the effective date, thereafter this restriction may be removed subject to

13
the approval of the Authority. The Authority shall grant its approval in
accordance with the policy directives of the Federal Government. To
establish, operate and maintain the following services, subject to
getting approval of the Authority regarding tariff/pricing structure and
submission of detailed technical plan in respect of each service:
I. Card Pay Phone Service and
II. Voice Mail Service; and
III. Centrex and Digital Services; and
IV. Data, E-mail and Internet, Value Added Services like LAN & WAN;
and
Intelligent Network Based Services such as:
V. Premium Rate Service (0900 Prefix Numbers)
VI. Virtual Private Network (VPN)
VII. Tele-voting
VIII. Automatic Alternate Billing
IX. Calling Line Identification Service
X. Free Phone Service (0800)
XI. Universal Access Number (UAN) Service.

In the event of a new telecommunication system becoming available

and if the Licensee plans to establish such a system, the Licensee shall
obtain prior written approval of the Authority. The Authority shall grant
its approval in accordance with the policy directive of the Federal
Government. The Authority may impose any further conditions on the
Licensee in furtherance of its functions.
This license is valid for the whole territory of Pakistan other than the
Northern Area and the territories that lie in Azad Kashmir
The authority, Shall, at the request of the Licensee, investigate and if
appropriate, take action in respect of any relevant matter notified by the
Licensee to the Authority as being a possible infringement of the

14
Licensee to the Authority as being a possible infringement of the
Licensee’s rights under this License.

• WLL services
NTC has started Wireless Local Loop (WLL) Services in 2005; providing
state of the art ISDN Wireless connections to facilitate its esteemed
subscribers
• MSDN-Internet
NTC’s multi-services data communication network costing Rs. 315
million will provide platform for all e-initiatives of the Government
including institutional intranet for Ministries/Departments and Internet
services to the Government. The project will also provide state-of-the-art
technology for airing of television programs of PTV and Intranet for
Federal Ministries/Divisions.
• PTV Transmission
Transmission between PTV centers on the latest Optical Fiber media.
• Multi-media services
NTC is providing Multi-Media Solutions and Services to its designated
customers whenever and where ever required like Video Conferencing,
Multimedia Presentations etc.
• ATM
The backbone is supported by the latest technology of ATM and over
SONET (PoS). Through this project, National Telecommunication
Corporation (NTC) is gearing up to provide exclusive Internet browsing
capabilities to the Government of Pakistan by becoming an Internet
Service provider. Besides extending telecommunication services to its
designated customers down to tehsil level, NTC has undertaken the
following major projects to support the e-governance initiatives of the
Government and to extend services to the remotest areas.

15
• PERN
Pakistan Educational and Research Network (PERN) will provide state-of-
the-art backbone to 56 universities in public and private sector to
interconnect the universities with institutions the world over, to enable
the students to access the sources of knowledge all around the globe
through Internet and to standardize their respective curricula. This
project has already started delivering services. This project is partly
financed by PTCL and is being done with their collaboration. IT
education is being extended to school level by providing personal
computers to 94 schools in the country where the student will be
trained in working on PCs in networking environment.

16
 PAKISTAN EDUCATION & RESEARCH NETWORK (PERN)
Legend
•ATM Switches 03
•Universities on OF 16
•Universities Online 11 Abbottabad
•Universities on DXX 22 Topi
•Universities on DRS 17
•Universities on VSAT 01

D.I.Khan

e
on
kbc
Ba
E3

Khuzdar Nawab Shah

Tandojam one
Khairpur b
a ck
E3Jamshoro
B

Pakistan has entered into space at its first communication satellite

PAKSAT has been moved on 17th December 2003 to its GSO slot at 38-
degree east.
• Media Services
It is fact that media is the back bone in any communicational set up.
NTC has its own telecommunication infrastructure & it provides
following types of media services like Microwave Media, DRS media, OFS
media, PCM media and Carrier media.
• Services for Mobile operators

17
Since NTC has its huge telecommunication set up all over Pakistan,
therefore, it provides following types of services for mobile operators:-
I. Installation of dishes & antennas on its towers
II. Provision of power supply
III. Space provision for installation of their equipment at NTC
premises

• Gateway Services for International Communication

NTC also facilitates its subscribers for international dialing. For this
purpose, NTC established its own International Gateway at Karachi.

ORGANIZATIONAL STRUCTURE
NTC organizational structure is attached at Annex-15.3

10.1Main offices

Following is the brief list of NTC main offices:-

Seri Main office Location

al
1. NTC F-5/1 Islamabad
Headquarters
2. Chief Engineer Jinnah Super Islamabad
office
3. RHQs Islamabad Green Tower Blue Area Islamabad
4. RHQs Peshawar The Mall Peshawar Cantt
5. RHQs Lahore 6-Race Course Road Lahore
6. RHQs Karachi Airport Exch. Building, Near Wireless Gate,
18
 Karachi
7. RHQs Quetta House No. 21-C, Jaffer Khan Jamali Road,
Quetta

8.2 Comments on Organizational Structure

NTC organizational structure has been framed for better monitoring &
control of NTC installations & its assets (financial, human, equipment &
material). In addition to prevailing feed back control, there exists a
prevailing practice of even feed forward control by implementing
fortnightly maintenance of each station which is possible through this
organizational structure because as per NTC standing operating
procedures, on occurring of a fault, intimation be given to all concerned,
however, if it persist then action can be taken by concerned Divisional
Engineer within one hour, if the situation is not being over come then
involvement by concerned Regional Director within four hours, if the
fault not rectified then Director (M&O) may involve within eight hours,
if it still persists then involvement by Chief Engineer(development)
within twelve hours. However, if all above efforts have no fruitful results
then involvement by Chairman within twenty four hours. The whole
efficiency & effectiveness of this monitoring & control lies in NTC
organizational structure.

19
STRUCTURE OF THE FINANCE DEPARTMENT
Finance is fundamental molding factor in office administration and the
running finance is like blood circulation for any organization. The
employee’s services have to pay, expenses of building, equipments,
furniture and other related expenditures which have been incurred.
Finance department follows the government rules and regulation in its
financial decisions. NTC being a self-financing corporation have its own
rules and regulation. As the NTC is statutory corporation so it has rules
and regulation authorized by government. The persons related to these
different sections have different responsibilities and they perform
different functions. These responsibilities and functions are as follows.

Member
Finance

Director Finance Director

Director Revenue
&Corporate Affair (B&A)

This department is headed by Member (Finance). Director (Finance &

Corporate Affairs), Director (Revenue) and Director (Budget & Accounts)
work under supervision of the Member Finance (BPS-20). Detailed
organizational chart of NTC Finance Department is placed at Annex-
15.4
9.1 Number of employees in finance department

20
Presently, there are 146 employees working in Finance department
through out the organization. They are active, energetic & enthusiastic
possessing high qualification and vast finance & accounting knowledge
experience to work in a competitive environment. Following is the break
up of staff working in finance department:-

Grade / Scale Finance Employees

BPS-17 & Above 26
BPS-01 to BPS-16 120
Total 146

9.2 Accounting & Finance Practices

NTC Accounts are maintained on double entry system on the basis of
GAAP (Generally Accepted Accounting Principles).
• Drawing and Disbursing Officer
All the Regional Directors are authorized to open and operate NTC bank
account for official transactions with the approval of the Members
(Finance)/Chairman. The Regional Director is declared DDO and will
open their account in the nearest National Bank of Pakistan. The
account is jointly opened by taking one person from technical staff and
other from finance.
• Authority to sanction Expenditures
Financial concurrence prior to the sanction of the expenditure for
purchase of stores items, durable goods, creation of posts, civil works,
supplies contract and house rent subsidiary obtained as prescribed in
the Delegation of Administrative and financial powers. The expenditures
are incurred against specific budgetary allocation and amount released.
The NTC Management Board shall do any re-appropriation from the
provision of the budget. Expenditure on procurement up to Rs.10,000/-
may be made through temporary advance to an officer of not less then
BPS-17. He should conduct proper market survey and collect spot
21
quotations (at least three) and purchase the items at lowest available
rates. Items involving cost up to Rs.2,500/- may be purchased without
collecting quotations. The officer making the purchases shall certify that
the purchase was made at the lowest rates available in the market on
the back of the bill. For procurement involving cost above Rs.10,000/-
and up to Rs.100,000/- limited sealed quotations may be called. Three
officers including Divisional Accountant shall open the quotations. A
comparative statement is prepared and after approval of the competent
authority an order shall be placed to the lowest bidder. Purchases
involving cost of Rs.100,000/- and above shall be made after inviting
bids through open tenders. The specification for items to be procured
should be generalized to allow the participation of maximum bidders. If
two or less quotations are received both in limited and open tenders the
item should be re-tendered. In case of an operational emergency the
foregoing procedure may be substituted by recommendations of a
Purchase Committee comprising of three officers including the Divisional
Accountant. The Committee should survey the market, obtain three
quotations, recommend the lowest quotation, obtain approval of the
Competent Authority and make the purchase. All Payments shall be
made through cross cheque. Incurring of expenditure without or in
anticipation of budgetary release is not permissible unless concurred by
the competent authority.

• GP Fund Accounts
GP Fund accounts of NTC employees are centrally maintained at the HQ.
All GP Fund payments including G .P Fund advances are approved at the
Headquarters. For payments from GP Fund, authority will be issued to
the concerned DDO for release of payment to the individual. GPF
contributions of the Regional and Divisional staff will be deducted at

22
source from the releases of the respective Region/Division. For
regulations issued separately are followed.
• Payments
All payments supported by payment vouchers are made through
crossed cheque. Payment vouchers are properly prepared bearing
account head, particulars of payment, bill number and amount in figures
and in words. Income tax at source is deducted in accordance with
Income Tax Ordinance. For internal control, one official prepares a
voucher after 100% checking of the supporting documents and
verification of all conditions in the bill. The voucher then be checked
/audited by another officer and be approved by the competent authority.
In case of voucher for payment against supplies, following are needed:-
I. Original invoice of the supplier.
II. Supply order document.
III. Inspection report.
IV. Store receipt note.
V. Approval of the competent authority.

Once the payment has been made the invoice bill of the supplier is
stamped “PAID”.
Payments of salaries are made on the basis of pay authority issued by
the Finance Division. Taxes, utility bill, rent etc, be paid on the basis of
actual and on due date.
• Receipts
All receipt including telephone revenue and payment in lieu of
leased/speech circuits were deposited in the Revenue Account
maintained with the National Bank of Pakistan, Marriott Hotel Branch,
Islamabad till the subsidiary revenue account is opened at the regional
level. The cheques, Bank drafts, payment orders etc. should be
deposited in the revenue account within 24 hours of the receipts. No

23
unit or an individual is authorized to receive or collect the revenue in
cash. Neither any withdrawal can be made from the Regional Revenue
Accounts. For the time being pre-deposits advances shall also be
deposited in the main revenue account within 24 hours from the
receipts of the cheques, Bank drafts, payment orders etc. The procedure
for revenue accounting and Pre-Deposit works is formulated separately.
• Preparation of Ledgers/Accounts
In accordance with the budgetary head of accounts all payments are
recorded in the subsidiary ledgers, detail heads and then in control
accounts at the end of the month. The following registers are
maintained for accounting record:
a. Separate pay order register for payment of salaries to officers
and staff.
b. House rent subsidiary payment record register.
c. Indoor/out door medical payment registers.
d. Utility bills payment register showing period, amount, meter
reading etc.
e. Rent payment register.
f. Suppliers register.
g. Contingency payments register.
h. Repair and maintenance with respect to each type of fixed asset
i.e. individual building and machine wise etc.
i. Maintenance of vehicles shall be recorded in their respective
logbooks, which are invariably being audited at the end of every
month.

• Tax Deduction at Source

Income tax deducted at source is deposited with Government
treasury within 7 days of the deducted from all types of
payments (if comes under taxable limits) in accordance with
the rates prescribed in the Income Tax Ordinance. Schedule of
deductions from salaries showing name and designation of

24
employee and detail of his each type of deduction including
G.P. fund and group insurance, Benevolent Fund and Income
Tax is sent to the Finance Division by 5 t h of every month. The
amount against G.P contributions is deducted at source and is
deposited in the central GPF A/C. The respective
Division/Region deposits other deductions in the respective
heads of A/C in the Government treasury before the 7th of the
ensuing month.
• Preparation and Submission of Cash Accounts
Cash account is prepared in accordance with the budgetary
release/expenses incurred. The following documents are attached with
the cash account:
a. Statement showing both bank and cash opening balance, payments
during the month and likewise closing balance.
b. Bank statement.
c. Bank recon ciliation statement.
d. Outstanding temporary advances list. The list of outstanding
advances must show name (s) of the concerned official and date
when advance was drawn.
e. Outstanding TA/DA advances.
f. Original Vou chers.

• Closing of Books
Books are closed at the end of every month and cash accounts with
specified statements are sent to Finance Department by 5th of every
month directly by the concerned Director and Divisional Engineers. The
D.Es who are delegated the powers of DDO by their Directors should
also send a copy of the cash account to their Directors for review and
financial control. Cash account of the Director’s office is prepared and
sent separately on due date.
• Taxation

25
No provision is made in accounts for taxation for first three years
because the income of the Corporation is exempt from income tax
under section 41(18) of the Pakistan Telecommunication (Re-
organization) Act, 1996 for a period of three years from the date of its
establishment, but presently it is paid @ 35% as levied by Central Board
of Revenue.
• Fixed Assets Depreciation & Capital Expenditures
All Fixed Assets except freehold land is stated at cost less accumulated
depreciation. Freehold land and capital work in progress are stated at
revalued amount and cost respectively. Depreciation on operating fixed
assets is charged to income using the straight-line method. Full years’
depreciation is charged on additions during the year, while no
depreciation is charged on deletions during the year. Major renewals
and improvements are capitalized. Minor repairs and renewals are
charged to P & L Account.

• Short Term Investments

Short-term investments are stated at lower of cost or market value.

• Stores and Spares

Useable Stores and spares are valued at cost and charged to income on
first-in-first-out basis while items considered obsolete are carried at nil
value. Items in transit are valued at cost plus other charges paid
thereon.

• Revenue

Revenue is recognized when earned.

• Markup, Interest and Other Charges

Markup, interest and other charges on long-term loans are capitalized

up to the date of commissioning of the respective asset acquired out of

26
the proceeds of such long-term loans. All other markup, interest, profit
and other charges are charged to Profit & Loss Account.

• Foreign Currencies

Assets and liabilities in foreign currencies are translated into rupees at

exchange rates prevailing at the balance sheet date except those
foreign currency liabilities for which exchange risk cover has been
obtained from the Economic Affair Division, Government of Pakistan,
which are translated at the agreed rates. Transactions in foreign
currencies are translated into rupees at the rate ruling the date of
transaction. All exchange differences are charged to profit and loss
account.

• Budget Surplus

As per section 41(7), (8) & (9) of the Pakistan Telecommunication (Re-
organization) Act, 1996, National Telecommunication Corporation shall,
in respect of each financial year, prepare its own budget and submit it
for the approval of the Federal Government before the first of June every
year. The budget statement shall specifically state the estimated
receipts, current and development expenditure for the next financial
year.

• Capital Reserve

This represents revaluation surplus resulting from the revaluation of

land & building of Pakistan Telecommunication Corporation a per Vesting
Order clause (IX).

27
FUNCTIONS OF FINANCE DEPARTMENT
1.3 Accounting system of the organization
Normally, in Government owned organizations, cash based
accounting system is practiced. In contrast to this system,
NTC is following accrual based accounting system meeting the
requirement of GA AP (generally accepted accounting
principles). Whenever a transaction occurs, it is recorded in
respective books of accounts regardless of cash effect of
transaction. Thus NTC has made its Accounting practices and
operations according to International Accounting Standards
(IASs). Major books of accounts are cash book cum general
ledger, local purchase register & store register. Basically, the
source of final accounts is monthly cash account of each
region. Final accounts are prepared centrally.

10.2Financial system of the organization

NTC has to manage its assets and operations, and for this
purpose funds (finances) are required. Short-term
requirements like working capital needs and long term funds
requirements for purchase of fixed assets, line and wire
(intention works) establishment of new exchanges has to be
met with. Short-term financial needs are met from NTC own
resources. NTC generates revenue on monthly basis. Short
term financing is provided out of these revenues. As for as
long term financing is concerned, in the past NTC has been
depending on the Government for assistance. But now NTC
depends on its own resources. And it solely depends on
internal resources. This is a great advantage for NTC that it is
saving huge amount of interest.
28
• Current Asset’s Management
Working capital is the lifeblood of every business, by working
capital we means cash, inventories and marketable securities
etc. By net working capital we mean current assets minus
current liabilities. Working capital management aims at using
the monetary resources (cash) in a productive manner so that
these resources may not remain idle. NTC makes its best
efforts to optimally utilize the funds so that it could earn a
reasonable return. Funds Management Section in NTC strive
its best to make the idle funds productive. In NTC Head
quarters staff’s GP fund and CP fund Account are maintained
separately. Monthly deduction from the staff salary is made
and this amount is invested in various schemes of National
Savings. Most of the funds are invested in defense saving
certificates. The profit on these certificates is reinvested.
Cash is drawn from the bank as per daily needs. No additional
cash is drawn. At the end of the day the balance of cash
becomes zero. The efficiency of the funds management
section is judged from the fact that cash is deposited with the
bank for 10 days, one week and even for two days. In this
way interest on this money is not lost.

As for as the investment in inventories is concerned, it is

ensured that only a reasonable level of stock/inventories
should be maintained so that the heavy costs related with the
inventory are avoided since its establishment. Its current
assets include stores and spares, stores imprest control
account.
• Fixed Asset Expenditure

29
Fixed assets of NTC include land, buildings, line and wire,
apparatus and plant, transport /vehicle office furniture and
fixtures, electrical fittings computer and related equipment,
machinery and equipment. Expenditure on line & wires for 7
months from July, 2003 to January, 2004 was Rs.2,5950,045/-
and budgeted expense for 5 months from February to June,
2004 was Rs.5, 660,227/-. On apparatus and plant Rs.394,
214/- was incurred from July 2003 to January 2004 and
estimated expense for 5 months Rs.272, 486/- on office
vehicles Rs.69, 600/- were incurred in 7 months from July
2003 to January 2004. On office furniture estimated expenses
from February, 2004 to June, 2004 are Rs.315, 000/-Computer
and Related equipment’s actual expenditure from July, 2003
to January, 2004 is Rs.34790/- and estimated expenditure for
remaining period is Rs.77270/- As for as machinery and
equipment is concerned actual expenditure of 9 months from
July, 2003 to March, 2004 is Rs. 85,537/- and budgeted
estimate for three months form April to June, 2004 is Rs.27,
846/-

• Budgeting Process
Collecting the demands from all regions i.e., Islamabad,
Peshawar, Lahore, Karachi and Quetta carries out budgeting
in NTC. Capital and Revenue expenditures to be incurred are
provided in budget is an enhancing and long procedure; it
requires a great deal of skill, labour and intellect.
Capital and Revenue sections of the budget both are
important calling for special attention of the Finance
Department. Capital budgeting involves the replacement of

30
assets (buildings, equipment, office furniture, line & wire,
apparatus & plant etc.) most of the expenditure is incurred on
lying of underground network. As a growing organization, NTC
has to spend a huge amount of money as establishment of
new exchanges in different cities of the country, generally
before selecting various projects; the incremental cash flows
associated with the project are analyzed. But as for as NTC is
concerned, this exercise is not carried out. Since NTC serves
the national cause, it undertakes such projects, which are
vital to the national interests. The needs of the national
Institutions are analyzed and best efforts are made to fulfill
these needs. Revenue budgeting is also important. The
routine (day to day) expenditures are provided for in the
budget, Revenue budgeting includes wages, Rent, Repairs and
renewals, etc. Such expenses will benefit NTC for one year
(maximum). Budgeting is carried out for the period of one
year; however budget estimates are revised at the end of the
financial year. Budgeting is flexible in NTC as against Zero-
based budgeting. Budgeting based on Historical records is
practiced in NTC. Previous figures of expenditures are taken
as a base for the current year, this year requirements are
matched with the previous year’s actual experience and then
budget estimates are prepared.

2.3 Use of Electronic Data in Decision Making

NTC is in the phase of adopting paperless environment by
connecting its different departments through Intranet. At
present, NTC Headquarter and Regional Headquarters
Islamabad have already been connected through Intranet
using Oracle (Database), while other main offices are likely to

31
be connected in a year to come. This connectivity helps a
great deal in fast decision making & timely availability of data
& information vital for decision makers. Since the introduction
of Intranet, the operations of NTC have witnessed remarkable
time efficiency commensurate with its environment. The time
cost has been marginally decreased making the organization
time conscious & giving it mileage & competitive edge.
10.4 Mobilization of Resources
Since NTC is a developing organization, it needs to expand its
set up through out the country to meet the ever increasing
demand of public and private sectors. NTC is investing huge
funds in building its own infrastructure, so that its
dependence on PTCL network is minimized. Finance
department is playing a key role in utilization of funds to
those projects which have greater net present value (NPV).
For this purpose, extensive financial analysis is carried out at
NTC HQs level and inflows / outflows of these projects are
plotted against the time line. Similarly, efforts are being
made to recover the outstanding dues from public sector
organizations so that these funds could be invested in
profitable ventures.
10.5 Generation of Funds
There is hardly any organization in the world which relies on
equity financing to meet the monetary requirement of
projects. It is fact that most of transactions in the world are
credit transactions. NTC is no exception to it. To manage the
long term financial requirements, NTC has to generate funds
from external sources. The operations of NTC are financed by
its equity up to some extent which helps in maintaining a
sound debt to equity ratio. For long term borrowing, NTC has
32
to go to commercial banks (e.g. National Bank of Pakistan,
Muslim Commercial Bank, The Bank of Punjab etc.) through
Ministry of Finance Government of Pakistan. Like public sector
corporations, it can neither issue debentures to pubic in order
to raise funds, nor can it issue share capital to general public.
PTCL & OGDCL are public limited companies listed on stock
exchanges, therefore, they can issue share capital to masses,
while NTC being state owned corporation, can not do so. Since
the Government has some strategic interest in NTC that’s why
its ownership can not be transferred to general public in the
form of shares.
10.6 Sources of Funds
NTC has following two major sources of funds:-
I. Internal sources of Funds
Followings are the internal sources of funds
a) Fixed line connections.
Fixed line connection includes telephone revenue from
installation of telephone lines (one time cost) and usage of
telephone billed on monthly basis. Following table shows the
region wise telephone revenue trend.

TELEPHONEActual
Region
Budget Wise)
REVENUE (Region Actual
2003-2004 2004-2005 2004-2005

Avg Customers 66966 75772 75709

1000000 12
Islamabad 793.70 842.88 833.93

Lahore 527.53 591.04 594.24

Karachi 481.82 562.65 573.42

Peshawar 160.67 179.82 179.76

Quetta 70.63 84.96 90.10 33

TOTAL 2,034.35 2,261.35 2,271.45

Telephone revenue is the major source of revenue and it is
continuously increasing with the pace of growth and demand
for the telecommunication in the government sector. NTC is
heading towards the fixed line numbers of 100 thousands,
which will increase its revenue per fixed line. The following
table shows the revenue per fixed line

TELEPHONE REVENUE (Per Fixed Line)

Actual Budget Actual

Region
2003-2004 2004-2005 2004-2005

Islamabad 988 927 918

Lahore 656 650 654

Karachi 600 619 631

Peshawar 200 198 198

Quetta 88 93 99

TOTAL 2,532 2,487 2,500

b) Media (MW, DRS, OFS, PCM, Carrier) services
c) Internet services
d) PTV Transmission
e) Services for Mobile operators
f) Gateway services for International communication
g) Services for PERN project
NTC Media includes Microwave Circuits, Optical Fiber links,
Carrier services for other operators etc. NTC has its own ISP

34
to provide internet services to its esteemed subscribers,
MSDN internet carries handsome revenue. NTC has its own
gateway at Karachi which is proving carrier service to other
operators for international communication. PERN is providing
helpful services to facilitate the education sector. Following
table shows the various revenue sources

NTC REVENUE SOURCES

A ctual Budget A ctual

A ccount
2003-2004 2004-2005 2004-2005

Telephone 2 ,0 3 4 .3 5 2 ,2 6 1 .3 5 2 ,2 7 1 .4 5
Circuits 5 5 1 .4 6 2 2 9 .9 3 2 0 8 .7 0
PTCL 490.85 172.38 168.37
Others 60.61 57.55 40.33
Co-location 3 1 .8 9 5 1 .3 9 5 0 .4 8
MSDN 6 0 .6 1 9 8 .6 9 8 5 .2 0
Intranet 49.07 49.57 41.82
Internet 11.54 49.12 43.38
Dial-Up 0.58 1.01 1.32
A DSL 10.96 28.75 23.23
Intl.Bndwth - 19.36 18.83
Miscellaneous 1 9 .6 9 1 5 .3 7 4 0 .4 2
International 1 8 .1 1 2 3 1 .9 1 2 3 0 .0 6
Interconnect 2 5 4 .7 7 2 7 8 .2 4 1 6 .5 1

T OT A L 2 ,9 7 0 .8 8 3 ,1 6 6 .8 8 2 ,9 0 2 .8 2
Actual
Miscellaneous revenue Include Rs. 22 Budget
million sale of assets at Lahore Actual
Account
2003-2004 2004-2005 2004-2005

h) Interconnect Services
Domestic 190.14 259.15 16.51
PTCL
Interconnect 181.66
revenue is sharing 220.95
on usage of media. -
Local Incoming 109.77 197.16 -
NWD Incoming 70.13 21.97 -
WPC Incoming 1.76 1.82
Mobile 8.48 38.20 16.51

International 64.63 19.09 -

APC 46.09 19.09
Miscellaneous 18.54 - - 35

TOTAL 254.77 278.24 16.51

II. External sources of Funds
Followings are the external sources of funds
 Loan can be obtained directly from Government of
Pakistan
 Loan can be obtained by commercial banks.
The decision whether to rely on external sources or internal
sources depends on the current financial position of the
organization and liquidity analysis carried out from time to
time.

10.7 Allocation of Funds

For proper utilization of funds, it is foremost important that
financial resources must be diverted to correct usage so that
the output can be had as per expectations. For the allocation
of funds, NTC has a separate department named budget &
internal control. Director (Budget & Internal Control) can take
the decision after analyzing the projects which qualify for
allocation of funds. Every month, projects requiring funds are
reviewed so that the funding requirement can be met in an
amicable manner. Basically, routine expenditures or revenue
expenditures are financed on the basis of historical data while
capital expenditures are allocated on the basis of estimates
prepared by highly skilled personnel having in-depth relevant
knowledge & expertise in the respective field. It is ensured
36
that funds allocated are not diverted to some other purpose.
Further, at Regional Headquarters level, funds received from
NTC HQs are further distributed among divisions under the
auspicious of Assistant Director (Finance) on the basis of
periodic divisional requirements.

In fact, region-wise or branch-wise budget is not prepared in

NTC. However, demands are seeking from all regions i.e.,
Islamabad, Peshawar, Lahore, Karachi and Quetta and all
branches/sections in NTC HQs to carries out budgeting in NTC.
Practice adopted by NTC management is that usually budget
prepared on the basis of chart of account. In the Budget
amount allocated to the all heads of accounts individually as
appeared in the Chart of Accounts. For example, if funds are
required to any region or branch in any specific head with
proper justification i.e. head of vehicle or Apparatus & Plant
(A&P) etc. after approval/financial concurrence from the
Management, the Budget Section will issue sanction of
Allotment of Funds and the Payment section releases the said
amount in that particular head and at the year end actual
expenditure will be calculated and comparison for amount
Allocated to that Head of Account and Actual expenditure
incurred will be carried out.

37
CRITICAL ANALYSIS

When the NTC was born, in the beginning strict financial

controls were exercised. Hard efforts were made so that this
newly born organization may stand upon its own feet. Highly
educated and professional management tried their best to
generate the financial resources so that NTC could work
independently. At the time of establishment of NTC some
loans (liabilities) were also transferred to NTC along with the
assets. It was the major challenge for the management to
retire the debt and manage the assets in an efficient way so
that these assets could generate enough revenue to make the
NTC profitable.

11.1Financial Analysis

• Ratio Analysis
We will carry out financial Statement analysis of NTC as well
as horizontal analysis. The tools of analysis are financial
ratios.

• Debt to Equity ratio

It means that in year 2002 the profits have increased
resulting in low debt to equity ratio.

38
 1999- 2000- 2001- 2002- 2003-
2000 2001 2002 2003 2004
0.57 0.97 0.65 0.49 0.38

• Liquidity Ratios
Such ratios show the ability of an asset to be converted to cash as
quickly as possible. Following are the Liquidity Ratios Comparison
showing the current, quick and cash or liquid ratios.

Ratios 1999- 2000- 2001- 2002- 2003-

2000 2001 2002 2003 2004
Current
1.34 0.83 0.96 1.46 2.42
Ratio
Quick Ratio 1.33 0.83 0.83 1.4 2.41
Cash Ratio 0.19 0.51 0.54 0.90 1.40

Current Ratio = Current assets / Current liabilities

Quick Ratio = Quick Assets / Current liabilities
Cash Ratio = Cash + Investments / Current liabilities

Here is a five-year comparison of the liquidity position of NTC. These

results depict that over the five years, the current ratio has been volatile
i.e. it has a zigzag trend but in the last year it is quite satisfactory. The
quick ratio tells us a little bit different story. Over all it has increased
marginally from 1.33 to 2.41. But for two consecutive years 2000-2001
& 2001-2002 it remained un-changed i.e. 0.83. And the most significant
measure of liquidity i.e. cash ratio shows a remarkable increase over the
period of time. This is due to the increase in inflows over the years.

• Activity Ratios

Activity ratios, also known as efficiency or turnover ratio, measures how

effectively the firm is using its assets.

Receivable Turnover
Ratios (RT) Ratio2000- = Annual
1999-2000 2001-net credit sales /Receivables
2002- 2003-2004
2001 = Days
Average collection period (RTD) 2002 2003
in the year /RT Ratio
RT Ratio 5 2.3 2.2 2.7 1.90
RTD 73 days 157 165 132 192
• Efficiency of Assets of NTC
39
We will make an analysis of efficiency of assets. This efficiency is
measured by calculating the total asset turnover ratio; this is calculated
by dividing the net sales by total assets.

1999- 2000- 2001- 2002- 2003-

Ratio
2000 2001 2002 2003 2004

Assets Turn over

Ratio
0.22 0.17 0.22 0.26 0.27

Assets turnover Ratio of NTC is not adequate, it means that its assets
are not generating enough income, but when we make the comparative
analysis we come to know that in year 2003-2004 the trend is going
on positive direction. This increase in earning capacity is due to increase
in telephone revenue.

PROFITABILITY TESTS OF NTC

We will now measure the profitability of NTC and apply some tests to
ascertain whether the results have been improved or not to measure
profitability we will conduct following tests.
I. Net profit Margin
II. Return on Investment
III. Return on Equity

Ratios 1999-2000 2000- 2001- 2002- 2003-

2001 2002 2003 2004
Net profit
0.45 0.24 0.56 0.92 0.46
Margin
Return on
0.10 0.04 0.10 0.08 0.10
Investment
Return on
0.26 0.13 0.25 0.16 0.20
Equity

Over all net profit margin has increased over the five years from 0.45 to
0.46, it means that almost no change has been incurred.
40
As far as return on investment in concerned it has shown decline. Return
on equity also shows the same trend it has decreased from 0.26 to
0.20 over the five years.

INTERPRETATION OF HORIZONTAL & VERTICAL

ANALYSIS

When we compare the figure of revenue for four years we come to know
that the largest source of revenue i.e. the rent of M/W circuits shows a
declining trend i.e. from 82% to 51%. However the telephone revenue
has been increased significantly over the four years. If we see the
break-up of revenues of NTC we ascertain that highest revenue comes
from the rent of microwave circuits. Telephone Revenue is the largest
source of income. Break up of revenues in percentages is as under: -

A ctual Budget A ctual

A ccount
2003-2004 2004-2005 2004-2005

Telephone 2 ,0 3 4 .3 5 2 ,2 6 1 .3 5 2 ,2 7 1 .4 5
Circuits 5 5 1 .4 6 2 2 9 .9 3 2 0 8 .7 0
Co-location 3 1 .8 9 5 1 .3 9 5 0 .4 8
MSDN 6 0 .6 1 9 8 .6 9 8 5 .2 0
Miscellaneous 1 9 .6 9 1 5 .3 7 4 0 .4 2
• Horizontal Analysis
International 1 8 .1 1 2 3 1 .9 1 2 3 0 .0 6
Interconnect
When 2 5 4 .7
the horizontal analysis of 7last five2 7 8 .2 4is conducted
years 1 6 .5from
1

financial statements, it clearly shows that capital reserves remain the

T OT A L 2 ,9 7 0 .8 8 3 ,1 6 6 .8 8 2 ,9 0 2 .8 2
same, while long term loans are decreasing, employee retirement
benefits are increasing which is a good sign. NTC trade debts have
decreased due to better financial management policies. Short term
investments have increased because surplus reserves are invested.
However, NTC revenue & profit is decreasing due to severe competition,
while, financial charges decreased.
• Vertical Analysis

41
From the vertical analysis point of view, it is clear that share of capital
reserves are increasing due to initiation of development projects. P&L
Account is increasing because it accumulates. Operating fixed assets
are increasing. Operating costs increased & profit decreased due to
competition.

From the horizontal & vertical analysis it can be concluded that since
NTC is a Govt own corporation & most of its subscribers are Govt.
departments & Defence offices, which remain reluctant to pay their
dues & many of NTC receivables result as bad debts. However, its
financial management is leaving no stone to negotiate with its
subscribers to extract their pending dues. Since NTC has monopoly to
render telecommunication facilities to all Govt. departments, hence,
despite of all these problems, its financial ratios are exhibiting positive
sign. Moreover, all this show that NTC financial position is strong & will
further strengthen in future.

11.2 Organization Analysis With Reference To the

Industries Listed On The Stock Exchange

When we compare National Telecommunication Corporation with its

industry competitors, we come to know that NTC has monopoly because
as per section 41 (3) of Pakistan Telecommunication (Re-
organization) Act, 1996, the Pakistan Telecommunication Authority
(PTA) has granted a license to the National Telecommunication
Corporation for the provision of telecommunication services within
Pakistan to the Armed Forces, Defence Projects, Federal Government,
provincial Government or such other Governmental agencies or
Government institutes as the Federal Government may determine and
during the exclusivity period of the Pakistan Telecommunication
Company Limited (PTCL) specified in section 39, of the aforesaid Act,

42
the NTC shall not sell its capacity on the telecommunication system to
any person other than such Government agencies. Hence the question
of industry analysis does not arise.
11.3 Behavior of the Studied Organization in
Allocation of funds to different assets

When we critically analyze the various assets and their annual returns, a
big picture comes before us. At present, NTC assets are in the form of
exchanges, buildings, MW Circuits, transmission media etc. Now having
a bird’s eye view of revenue record, it is revealed that the greater return
on investment is achieved from media services. Here the rate of return
is about 20 % which is greatest in figures as compared to other assets,
while exchanges are providing not more than 11 % return on
investment. NTC has made long term investments in Defence Saving
Certificates. The major source of NTC invested funds is from employee's
contributory provident fund (CPF) while GPF is invested in banks on daily
basis. Rate of return on long term investments is not more than 10 %
right now due to access supply in the market.
11.4 Future prospects of organization

Being aware of the new technologies, demand for new services and
converged network NTC is in the process of upgrading and expanding its
network. Migration from conventional TDM network to IP based Next
Generation Network has been planned and being implemented. The 622
Mbps optical fiber backbone not able to meet the requirement of
bandwidth hungry applications is being upgraded to 10 Gbps DWDM
based technology.
To improve the efficiency ERP solution has been planned and under
process of implementation. To gain access to NTC users efforts are being
made for frequency allocation and as a stop gap arrangement virtual
WLL connections are being provided to NTC subscribers. To provide

43
value added service from its own platform NTC is planning its own IN
platform. Very soon NTC subscribers will be hearing NTC operators for
customer relations, call booking and complaints through its state-of-the-
art call center. Multi services access network has been planned to be as
close to the user on fiber as possible to extend multiple services from a
single platform. Plan for replacing analog microwave with digital is being
made so that NTC can meet the requirements in case of disasters and
can provide an alternate to optical fiber backbone. The co-location
facilities are being planned to facilitate new entrants in performing their
operations.
NTC has traveled a long way in developing its infrastructure in lines with
the technological and market trends. NTC is determined to provide an
infrastructure required to meet its objectives and to support the nation
and GoP in achieving its objectives. Through PERN (Pakistan Educational
Research Network) project, NTC has connected all the major universities
& colleges of Pakistan through internet and efforts are being further
enhanced to link them internationally.

FUTURE PROJECTS
• NGN
The telecom industry has seen steep price falls since deregulation.
Several changes to the industry are already taking place. Next-
Generation Networks (NGN) are rapidly evolving and are already being
embraced by major providers in order to reduce operational expenditure
and support high-value services. Throughout the world, enormous sums
are being invested to establish IP-based NGN, both for creating new
capacity and for enabling existing narrowband networks and future
broadband ones to run IP-based services.

44
NTC is fully geared up to meet the new challenging environments in the
competitive era after the deregulation and deployment of NGN is a
major step in that direction. NGN technology delivers the technological
flexibility that will dramatically reduce costs and satisfy the
requirements for voice and data convergence. NGN protects existing
network investments while ensuring that operators are able to cost-
effectively deliver new services. NTC is planning to deploy multi services
access platform capable of providing POTs, XDSL, PRIs, IP Phone &
other cost effective and value added services to the end users.

Soft
MGCP Switch
H.248
SIP
TDM H.323
Network
SS7

Media/Trunk
IP Cloud E1
Gateway & E1
Signalling IP Core Media/Trunk
Gateway Router Gateway

SIP

POTs IP Phone / SIP

Access XDSL terminals
Gateway ISDN-PRIs/BRIs

Implementation of Next Generation Network

• DWDM
NTC DWDM network consists of 80 DWDM and 112 SDH nodes equipped
with different flavors of SDH data rates and various ring structures. The
network has been designed in such a way that 8 Lambda's will be
readily available for loading of any type of wavelength supported
services especially keeping in view of new emerging technologies like IP
45
over DWDM to handle the imminent bulky demand of IP traffic.
Moreover, the plan is also underway to digitize the Pakistan largest
analog microwave network (covering most of the rural area) which will
intersect the DWDM network at various sections to provide a solid base
for the extension of telecom services to deprived area's of Pakistan. This
plan will provide a redundant network in case of emergency situation
and would also play a significant role in the reduction of digital divide.
This natural blend of two FDM technologies (in glass and air) at
intersecting points would certainly facilitate NTC optimum bandwidth
utilization.
• VIDEO CONFERENCING
NTC has undertaken this challenging project which is directly related to
overall objectives of IT Action plan and the concept of e-Governance.
NTC has deployed state of the art hardware and designed a scalable
network by means of which fast, reliable, secure and real time access
will be possible between the top Federal and Provincial Government
officials for better and closer communication without physical
displacement.
With Video Conferencing System deployed, Federal and Provincial
government officials and ministers can do telecasting from NTC offices.
The video conferencing system possesses the scalability to include the
remaining Federal ministries' and their respective sub-offices in other
cities to accommodate future requirements.
Video Conferencing Studios
Considering the fact that most effective conferencing system is one
which meets customer's communications needs initially video
conferencing studios in Islamabad, Lahore, and Karachi have been
designed. A special consideration is given to following parameters;
 Conferencing setup and services
 Audio and video requirements

46
  Information sharing needs
In the present competitive environment, NTC wishes to facilitate its
subscribers by introducing latest IT & Telecom services at affordable
rates, ensuring Quality of service. Our network design and infrastructure
is scalable and flexible to the extent that it can and will continue to
support emerging technologies and services. NTC is in constant pursuit
of achieving customer's satisfaction in present as well as in future.
• FUTURE of MSDN
NTC has established a Multi-Services Data Network (MSDN) project for
providing various data services including multi-media applications to
Govt and semi-Govt organizations in federal / provincial capitals and
other major cities of the country. MSDN is performing a multi-role action
in meeting the bandwidth requirements of government & allied
departments. The basic philosophy of the said network is to provide
connectivity for Internet / Intranet and also be able to support Value-
added services. Govt. of Pakistan is actively deliberating on launching
its E-Governance program to promote information technology. Exchange
of data information between ministries and their regional offices and
access of information by the public is an essential element for its
success. NTC Multi-Services Data Network will act as backbone to
provide required connectivity.

The main objectives for implementing MSDN is to provide dedicated

platform for all governmental e-enabled activities, data connectivity for
other organizations like SBP, NBP, AGPR, NAB etc., ISP setup for
government and semi-government organizations, video conferencing
facility, intercity connectivity etc. Information from the network will be
accessible through a variety of information-handling devices, such as
PCs, interactive TVs, telephones, or future devices that combine the
attributes of all three, as well as through wireless devices such as
pagers, wireless phones, personal digital assistants (PDAs), and future
47
broadband devices. NTC’s Multi-Services Data Network is designed in
such a way that 06 High-End ATM Core Network Switches in Islamabad,
Lahore, Karachi, Faisalabad, Peshawar & Quetta are interconnected
using Optical Fibre SDH backbone on 34 Mbps(E3) while more than 30
Access Network Nodes are spread all over the country. They are
connected to the nearest ATM Node either on 34 Mbps (E3) or on
multiple of E1s. Moreover NTC is in the process of establishing its own
transport media of 10 Gbps(DWDM) on both sides of Indus River (on
existing MAIN & ALTERNATE routes) between Peshawar & Karachi. The
MSDN backbone will be shifted on new media soon after its completion.
The second core technology being used is Packet over Sonet (PoS)
Juniper M-20 routers for exclusively routing IP traffic between three main
cities Islamabad, Lahore and Karachi. MSDN is a secure, well managed
& state of the art technology network. A complete ISP setup is
established at Islamabad while Internet and Intranet services are being
offered all over the country. MSDN basic services include Dialup, ISDN,
DSL, Intranet circuits, Web Hosting and E-Mail etc. Future services
include Value Added Services like Personal Web Space, SMS Gateway,
WAP Gateway, Fax Gateway Unified Messaging System for Voice,
Electronic Telephone Directory Services, Roaming Internet Access
facility, VPNs, Retrival of E-mail on PSTN (EWSD platform) telephone
connection (text to speech translation), Information about E-mail on
telephone line, Dial-out on internet (VoIP) etc.

• FUTURE of PERN

48
Pakistan Education & Research Network (PERN) previously known as
Educational Intranet project is successfully implemented by NTC in
collaboration with Higher Education Commission (HEC) and Pakistan
Telecommunication Corporation Limited (PTCL). Presently 59 Universities
/ Degree awarding Institutes in Public & Private sector are on-line
through this project whereas 59 more Universities / Degree awarding
Institutes will be up in next phase of the project. President of Pakistan
General Prevaiz Musharraf inaugurated the project in December 2002.
The purpose of PERN is to make the Universities / Degree awarding
Institutes accessible to each other and to the Internet for data exchange
and retrieval of information from the Internet.
The major objectives of PERN are
a) To establish a country-wide data communication platform to
interconnect universities to promote quality education, computer
literacy and better opportunities for students / instructors in
collaborative research and development environment.
b) Provision of International bandwidth on sharing basis for Internet
access from a centralized location.
c) An access platform for interconnection of universities/educational
institutions with the Virtual University.
PERN network has been designed in such a way that university /
institute is connected / linked with the nearest exchange of NTC / PTCL
using OFS, DXX, DRS & VSAT as a Last Mile in accordance with its
technical feasibility. 03 Point of Presence (PoP) / core nodal points are
established at Islamabad, Lahore and Karachi. The nodal points are
acting as a hub for cluster of universities / institutes in their region.
Routers at the university / institute premises provide connectivity with
access routers from the nearest node. The 03 core nodes are
interconnected on E3 while access nodes are connected with main nodal
point on multiple E1s and universities are connected on multiple of E1s

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with nearest exchange. The bandwidth up-gradation for each university
is also in planning phase.
• WIRELESS LOCAL LOOP (WLL)
NTC CDMA phone is an alternate to NTC landline with an added
advantage of enhanced services. It’s the wireless telephony revolution
based on CDMA 2000 Technology that combines the best features of
both mobile and landline. It’s the only service that allows freedom from
all sorts of telephonic hassle .This unique and innovative service is
the beginning of a new era in connecting people. Go ahead and
experience this new exciting service, specially designed keeping in mind
the needs of our designated subscribers.

SHORTFALLS OF FINANCE DEPARTMENT

Finance department is working quite firmly and fairly but yet there are
some gray areas which lead towards the shortfalls/weaknesses of the
operations there.
12.1Critical analysis of the management patterns of the
organization with reference to financial operations,
weak areas that need to be improved

50
Following are the points to be considered as the weaknesses of
operations:

• Fund Management & utilization

Some of non-developmental projects which have been initiated don't

yield the desire level of profits. NTC management may keep an eye for
controlling such non developmental expenditures.

• Training for Finance staff

Presently, there is no training facility for finance staff to up-date their

knowledge about accounting and financial practices so that staff could
be meet future needs / demands.
• Non resolution of disputes with PTCL

NTC finance wing has yet not been succeeded to resolve the issues with
PTCL relating to balance of GPF for PTC period prior to 1996 of all those
NTC employees who were working in PTCL, before the formation of NTC.
Further there still persist the disputes between NTC & PTCL over the
possession of NTC vesting assets.
• Non development of NTC own complete infrastructure

The present NTC infrastructure was accrued to NTC as a result of Re-

organization Act. Since NTC has not made serious efforts to establish /
flourish its own infrastructure on war footing, therefore reliance on PTCL
networks is a huge revenue loss for NTC.

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FINDINGS & RECOMMENDATIONS
Following is the brief list of findings and recommendations:-
• FINDINGS
i). At present a great number of employees are either on contract or
deputation.
ii). Round about 20% posts in finance department are vacant.
iii). Most of staff in finance department is newly appointed therefore;
no proper training has so far been arranged.
iv). Computer training has not been imparted to all staff of Finance
department.
v). Now-a-days there are two ways of transfer of funds i.e. from
Headquarters to regions and Regions to Headquarters. From
Headquarters Cash is remitted for expenditure in Regions where as
deductions from salaries of staff on account of G.P.F, C.P.F, Q.Loans,
etc. are remitted to Headquarters and hence pay bank charges
twice.

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vi). After its establishment, NTC pace for development of its own
infrastructure is slow & in many cases it has yet to rely on PTCL
because pays a huge sum to PTCL for use of equipment
vii). Although the telecommunication industry in Pakistan is swiftly
growing, and despite of its own infrastructure, NTC has yet not
started its own mobile service in Pakistan.
viii). There is slackness in Working capital management in NTC.

• RECOMMENDATIONS
Based on findings, recommendations are laid down as under:-

i). Contract employees may be regularized because it will have a multi

dimensional effect including soother ness & satisfaction in contract
employees as well as their dedication with job & organization will
further flourish.
ii). Deputation policy is discouraged because deputationists have less
interest in long term prospects of the organization and they try to
reap short term benefits. In this regard, permanent/ regular
employees may be hired, especially in the technical side, so that
the advantage of fresh knowledge about advancement in
technology could be utilized. At present the officers working as
regional heads (regional directors) are deputationists, mostly from
Armed forces, which may be avoided. Furthermore, at this level
personnel may be hired on contract basis and the extension in
contract period may be conditional and solicited after evaluation of
their past performance and achievements.
iii). Round about 20% vacant posts in finance department should be
filled without any delay.
iv). Newly appointed finance staff be given proper training.

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v). Since we are moving through an era of Information Technology,
therefore, Computer training may be given to all staff of Finance
department working in NTC.
vi). In order to escape from twice deduction of bank charge because of
two way transfer of funds, it is proposed that funds may be
transferred from Headquarters after deduction of amount of
deductions.
vii). Attention might be given to convert government telephone from
PTCL to NTC to increase the revenue.
viii). In order to survive in a competitive environment, NTC may
flourish its infrastructure on war footing so that its reliance on PTCL
should be minimized and it could attain 100% revenue.
ix). NTC may launch its mobile service to capture the market and get
its share from the market.
x). Working capital management in NTC needs to be improved.
Negotiations with the Govt. departments may be carried out to
recover the receivables. Bank loans be either avoided or obtained at
reasonable cost, keeping in view the capital needs of the
organization.

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 Extracts from

NTC FINANCIAL
STATEMENTS

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