KARACHI:
Pakistan’s listed technology sector remained in the red in 2025 despite improved telecom pricing and subscriber growth, underscoring the structural profitability challenges facing the country’s digital economy even as broader corporate earnings expanded during the year.
According to Arif Habib Limited (AHL) research, the technology sector posted a net loss of Rs2 billion in CY25, compared with a loss of Rs6.6 billion in the previous year, reflecting a narrowing deficit but continued negative earnings. The improvement was largely driven by reduced losses at Pakistan Telecommunication Company Limited (PTCL), the sector’s dominant listed player.
Arif Habib Limited (AHL) Equity Research Analyst Menka Kirpalani said the sector’s relative improvement was primarily attributable to PTCL’s operational recovery. “The technology sector recorded a loss of Rs2 billion in CY25, compared to a loss of Rs6.6 billion in the same period last year. This improvement was basically due to PTCL. PTCL’s loss in CY25 was Rs9.7 billion, compared with around Rs14.4 billion in the same period last year,” she noted.
She explained that the company’s turnaround momentum became visible in the final quarter. “The main reasons for the decrease in loss were an increase in PTCL’s subscribers and higher telecom prices, which supported the top line. Besides that, finance costs also declined due to lower interest rates,” Kirpalani said.
The sector’s continued losses highlight the structural pressures facing Pakistan’s digital economy, including high capital intensity, regulatory constraints and weak monetisation, even as telecom operators benefit from tariff adjustments and easing financing conditions.
The technology sector’s weak profitability contrasts with the broader performance of companies listed on the Pakistan Stock Exchange (PSX)’s benchmark KSE-100 index, which collectively posted earnings growth during the year.
AHL data shows that KSE-100 index profitability, based on companies representing 83% of index weight, rose 5.3% year-on-year to Rs1.56 trillion in CY2025. The increase was driven mainly by strong gains in investment banking, auto assemblers, cement and textile sectors, while several energy-related segments recorded declines.
Commercial banks remained the largest profit contributor, with earnings rising 10% to Rs640 billion in 2025. The sector benefited from expanding low-cost deposits, provisioning reversals and balance-sheet strengthening despite a declining interest-rate environment.
Auto assemblers recorded one of the strongest rebounds, with profits surging 44% year-on-year to Rs88 billion. The recovery was supported by easing inflation, revival in auto financing, new model launches and stronger cash positions of listed players, although tractor demand remained weak due to subdued farm economics and flood-related disruptions.
Cement sector earnings rose 24% to Rs165 billion, driven by lower coal prices, higher dispatches and reduced finance costs amid monetary easing. Similarly, textile composite companies posted a 31% increase in profitability to Rs13 billion, benefiting from declining cotton prices and lower borrowing costs.
Investment banking companies registered the fastest growth, with profits jumping 50% year-on-year, reflecting improved capital-market activity during the period.
In contrast, several energy-linked sectors recorded earnings contraction. Exploration and production (E&P) companies saw profits fall 10% to Rs331 billion due to lower international oil prices, reduced output and higher operating and royalty expenses. Refinery profits plunged 57%, while power-sector earnings declined 26% amid contract changes and provisioning impacts.
Despite the modest earnings growth, shareholder returns strengthened significantly. KSE-100 companies paid total dividends of Rs808 billion in CY25, up 23% year-on-year, taking the payout ratio to 52%. Banks accounted for the largest share of dividends, followed by the energy and fertiliser sectors.
However, momentum weakened toward the end of the year. Fourth-quarter KSE-100 profitability declined 2% year-on-year to Rs383 billion, mainly due to earnings contraction in REITs, oil marketing companies, chemicals, E&P firms and banks, although power, textiles and auto sectors posted strong quarterly gains.
The technology sector was among the few segments showing quarterly improvement, with earnings rising 42% year-on-year in the final quarter as PTCL turned profitable.
The AHL report suggests that Pakistan’s corporate sector overall is gradually adapting to a lower-inflation, lower-interest-rate environment, with margin recovery visible in several industrial sectors. Yet the continued losses in technology underscore that the country’s digital economy remains in an investment phase rath er than a mature profit-generating segment.
