PACRA Assigns Preliminary Ratings to Airlink Communication Limited - PPSTS-VI - PKR 3.0bln | TBI

Airlink Communication Limited (“Airlink” or “the Company”) operates in two key business verticals: (i) distribution and retail of mobile phones and (ii) assembly of smartphones and related products in Pakistan. The Company’s assigned ratings reflect strong business fundamentals, supported by its growing market position and partnerships with renowned global brands, ensuring a diversified revenue stream. Its vertical integration further strengthens its operations, from assembling mobile devices for leading brands to distributing them through a nationwide network. Additionally, Airlink has made substantial investments in its wholly owned subsidiary, Select Technologies (Pvt.) Limited, which assembles mobile phones exclusively for Xiaomi Pakistan (Pvt.) Limited, a subsidiary of Xiaomi Corporation—a leading global brand from China. Xiaomi continues to expand its presence in Pakistan with both existing and new products. The local industry is advancing steadily, fueled by expanding network coverage, a wide array of mobile devices, increasing technological demand, and the widespread adoption of mobile phones among Pakistan’s ~225mln population. The market is rapidly shifting from feature phones to smartphones. However, the local assembly industry has experienced a dip in volumes, with demand slowing due to a surge in taxes. According to the Pakistan Telecommunication Authority (PTA) data, ~12.05mln units were assembled in 5MCY25, lower than the 31.8mln units assembled throughout CY24. In line with this trend, the Company’s consolidated revenue declined by ~12.1% to ~PKR 85.6bln during 9MFY25 (FY24: ~PKR 129.7bln), mainly due to a temporary dip in demand caused by higher taxes. However, as per the management’s representation, market price adjustments are now assimilated, and volumes are once again rising. Moving forward, Airlink plans to strengthen both its assembly and distribution segments. The Company's capital structure is leveraged, relying primarily on short-term borrowings, including debt instruments, to meet working capital needs in the assembly and distribution segments. This reliance has increased following the recent imposition of sales tax in FY25. The financial risk profile demonstrates adequate working capital cycle, coverage ratios, and cash flow.
The underlying instrument is secured by a ranking charge over the Company’s current assets. The Issuer must maintain a Debt Payment Account (DPA) under the lien of the Investment Agent. Payments will begin 50 days before maturity and continue fortnightly to ensure the full issue amount is available in the DPA 05 days before maturity. Principal and profit repayment will be made in a bullet payment.
The Company’s ratings are contingent on its ability to uphold its market position in an industry that is rapidly transforming. Compliance with agreed-upon financial metrics, especially in terms of cash flows and leverage, will remain critical.

About the Entity
Airlink is a public listed company primarily engaged in the distribution and assembly of mobile phones and allied products. Mr. Muzaffar Hayat (CEO) and the family own a majority stake in the Company.

About the Instrument
Airlink is set to issue its sixth Rated, Secured, Privately Placed, Short-Term Sukuk-VI. While PPSTS-IV’s DPA has been completely filled, amounting to PKR 3.0bln and it will be redeemed in a due course of time. Currently, Airlink's PPSTS-V of PKR 4.0bln is available in the market. PPSTS-VI will carry a markup rate of 6MK+1.75% and will have a six-month tenor.