The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Nadeem Sheikh

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PACRA Maintains Entity Ratings of Pakistan Mobile Communications Limited

Rating Type Entity
(10-May-19 )
(08-Nov-18 )
Action Maintain Maintain
Long Term AA- AA-
Short Term A1 A1
Outlook Positive Positive
Rating Watch - -

The ratings incorporate robust business profile of the company, represented by a leading market share of ~37% with ~58 million cellular subscribers as at End-March’19. This strong share has been achieved with organic and inorganic growth. The company enjoys synergies related to operational and technical network, reflected into better earnings for the merged entity. Optimizing on its single brand "Jazz", the company commands solid volumes and strong margins. Additionally, in collaboration with Mobilink Microfinance Bank, an associate entity, the company is establishing a strong digital banking platform. Overall market dimensions remain positive, particularly in mobile data services, as penetration level in 3G/4G subscribers stands at ~32% as at End-March’19, depicting sufficient room for growth. Tax is again being deducted on mobile top ups and services, which will normalize the growth in future periods. The company's financial risk profile exhibits a strong outlook demonstrated by prudent working capital strategies and comfortable coverages. Company’s 2G license, acquired through acquisition of Warid, is due to expire on 26th May 2019. Uncertainty, regarding renewal of license is continue to prevail as the PTA has not yet issued the Information Memorandum (IM) stating the term of license. However, the company has obtained the stay order from Islamabad High Court to continue operation until the renewal of license. The company has invested PKR 28,123bln in money market funds and treasury bills, which reflects available liquidity cushion.
The ratings are dependent upon the sustenance of robust revenue growth and profitability. Positive outlook captures the leading market position of the company and the strong financial indicators along with improvement in capital structure. The company’s ability to maintain its market position along with smooth continuation of operations is pertinent to the ratings. Meanwhile, growth in average revenue per user of the company is also considered important.

About the Entity
Pakistan Mobile Communications Limited (PMCL) – brand name ‘Jazz’ commenced its operations in August 1994. Global Telecom Holding (GTH) – which is majority owned by one of the world’s leading telecom group – VEON (formerly VimpelCom), owns ~85% shareholding of the company. Rest ~15% lies with Abu Dhabi Group through share swap transaction of PMCL-Warid merger. VEON is among the largest telecom operators in the world in terms of subscribers with approximately 244mln customers in 13 countries. The company's ten-member Board of Directors (BoD) is mainly composed of representatives from VEON. His Highness Sheikh Nahayan Mabarak Al Nahayan chairs the board. Mr. Aamir Ibrahim, the CEO, has over two decades experience in local and international market.

About the Instrument
The company had issued a Sukuk of PKR 6,900mln in two parts; PKR 3,000mln on Dec 22, 2014 and PKR 3,900mln on Sep 3, 2015. The profit is payable quarterly at three month KIBOR plus 35bps. The first principal payment was made on Mar 22, 2017. Total outstanding principle amount of PKR 1,725mln will be paid in three equal quarterly installments. The Sukuk has been provided a partial credit guarantee of PKR 966mln by GuarantCo, rated AAA by PACRA.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.