PACRA Assigns Preliminary Rating to Pakistan Mobile Communications Limited | PPSTS-III | PKR 15bln | TBI

Pakistan Mobile Communications Ltd (“PMCL”/ “Jazz” or the “Company”) is a leading telecom services provider, delivering cutting-edge voice, data, and digital solutions to millions across the nation. With a presence in 230+ cities and serving over 30,000 businesses, Jazz remains at the forefront of the industry through innovation and robust connectivity. Company is leveraging its expertise in data and connectivity to revolutionize sectors like financial services, software development, data centers, cloud solutions, and entertainment. PMCL’s ratings are supported by a strong ownership and governance framework, further strengthened by its sustainable business operations. Its parent Company, VEON Limited (VEON), enhances Jazz’s market position and competitiveness. VEON delivers critical communication and digital services to over ~160mln customers globally and operates across six countries. Jazz maintains its position as the market leader, holding ~37% share of the cellular market in terms of total subscribers. However, subscribers growth remained constrained, with the reported ~71.5mln subscribers as of CY24, marking no change from CY23. The Company is actively diversifying its revenue streams by exploring new ventures, including digital financial services and cloud platforms for advanced data hosting in Pakistan. The Company also aims to capitalize on various products by establishing distinct verticals for its digital offerings. During CY24, PMCL achieved a revenue growth of ~14% (CY23:~13%), primarily driven by enhanced ARPU, which also led to the improvement in margins at all levels. The Company's financial risk profile remains adequate, with comfortable coverages, cashflows, and working capital cycle. The leveraging increased to ~69% (CY23: 53%) primarily due to license fee payments and capital expenditure requirements and inclusion of short term debt towards the end of year at sub KIBOR rate.
The ratings are contingent upon maintaining a leading market position, robust revenue growth & profitability, and a sound financial matrix. As the capital structure becomes more leveraged, it is imperative to uphold sound financial discipline.

About the Entity
PMCL commenced its operations in August 1994. The Company is a subsidiary of International Wireless Communications Pakistan Limited, which, holds ~85% of the issued share capital in the Company. VEON Pakistan Holdings B.V ("VEON Pak") holds ~15%. The ultimate parent Company is VEON Ltd.

About the Instrument
PMCL is set to issue the third-rated, unsecured, privately placed short-term Sukuk-III (PPSTS-III), while Sukuk-II ~PKR 15bln is already in the market and will be redeemed by April 21, 2025. The third issue amount shall be up to PKR ~15bln (inclusive of a Green Shoe Option up to PKR ~5bln) to be disbursed either in single or multiple tranches/issues. The funds will be utilized for general corporate purposes, including but not limited to capital expenditure and license-related payments. The tenor shall be six (06) months from the Issue Date of each tranche. Similarly, principal is to be redeemed as bullet payment six (06) months after the issue date. The profit rate is expected to be set at 3MK - [15bps] p.a. Profit will be payable at the maturity of the Issue and will be calculated 365/366-days on year basis. The issuance of PPSTS-III is at an advanced stage.