PACRA Maintains Entity Ratings of Trans World Enterprise Services (Pvt.) Limited

Trans World Enterprise Services (Private) Limited (“the Company” or “TES”) ratings reflect an emerging business profile and robust presence in the telecommunication industry. TES specializes in providing reliable internet connectivity through a scalable Fiber-to-the-home (FTTH) network. Additionally, the Company offers comprehensive Tru TV™ and Voice services, solidifying its reputation for reliability and innovation in the sector. Assigned ratings take comfort from Company’s association with its parent, Trans World Associate Limited (TWA), a Tier-1 network operator in Pakistan having exclusive and consortium ownership of submarine fiber optic cable network systems, thereby bolstering the Company’s strategic initiatives aimed at achieving sustainable long-term growth. The Company has emerged as a dynamic player in the telecommunications sector, driven by a strategic vision and an unwavering commitment to customer satisfaction. In a technology-driven world, reliable connectivity and quality assurance are pivotal for customer retention. The Company is actively expanding its presence across Lahore, Karachi, and Islamabad, where it currently holds a sizeable presence. As per management, the Company has achieved an average penetration of ~20% across its active regions, relative to the total fiber optic-enabled households (house passes) in those cities. According to the latest data from the Pakistan Telecommunication Authority (PTA) regarding the FTTH segment, as of Dec 2024, TES holds the 6th position in terms of active subscribers, commanding a market share of 3.6%. During CY24, the Company’s topline clocked in at PKR 4,428mln, reflecting a growth of ~21.7% (CY23: ~PKR 3,639mln). The growth is primarily attributed to two factors: (i) increase in customer base & (ii) increased prices. Despite revenue growth, gross margin declined to 30% (CY23: 39%) due to cost escalations that were not fully passed on to customers. However, the operating margin remained stable at 7%, supported by effective cost rationalization measures implemented across all levels. The Company reported a net loss of PKR 7mln, lower than the loss of PKR 80mln in CY23. Going forward, the Company anticipates sustaining its growth trajectory in the FTTH segment by leveraging its enhanced area coverage to acquire new customers. The Company sources 100% of its internet bandwidth from TWA. Bandwidth charges are directly pegged to the USD, which creates a potential disparity between sales and cost of sales, as the selling price remains PKR-denominated. The BOD of the holding company oversees the business, and besides the quarterly board meetings, BOD members take monthly briefings on the financial performance and network expansion progress. A team of professionals and industry specialists augments the operations of the company. The Company has implemented a robust internal control system across the organization, complemented by top-notch IT, business insight & intelligence, and financial reporting solutions. The financial risk profile of the Company is characterized by modest coverages and cashflows. Capital structure is leveraged; encompassed by long-term borrowings. However, the parent company injected PKR 1,206mln in equity through a share deposit.
The ratings are dependent upon improvements in revenue, profitability, and market share while retaining sufficient cash flows and coverages. However, adherence to maintaining its debt matrices at an adequate level and alignment with the shared financial projections will remain paramount.

About the Entity
TES was incorporated as a private limited company in Pakistan on 28 February 2011 under the Companies Ordinance, 1984. TES is a wholly-owned subsidiary of TWA. The Board consists of four directors, three of whom are executive directors and one is a non-executive director. Mr. Junaid Iqbal Khan is the CEO, Mr. Saad Muzaffar Waraich is the President, Mr. Aasif Inam is the Deputy CEO/Chief Commercial Officer (CCO), and Mr. Naveed Ahmed Malik is the Executive Vice President, Finance of the Company.