PACRA Assigns Initial Ratings to Pakistan Mobile Communications Limited | PPST Sukuk III- PKR 15bln

Pakistan Mobile Communications Ltd (‘PMCL’ or the ‘Company’) leads Pakistan’s telecom sector with ~37% market share and 73mln subscribers as of March 2025. As a top provider of 3G and 4G services, PMCL drives innovation and industry growth. Its expansion into Digital Financial Services (Jazz Cash, Mobilink Microfinance Bank) promotes financial inclusion. The Company is also growing in data analytics, cloud services, fintech, and mobile entertainment. As per, Pakistan Telecommunication Authority, the telecom industry recorded ~17% revenue growth, reaching PKR ~955.2bln in CY24. This growth was primarily driven by the expansion of 3G and 4G services. Out of the total, the cellular mobile operators (CMO) contributed ~PKR 629.2bln. PMCL saw a ~14% increase in revenue, with net margins improving from ~1.9% in CY23 to ~15.3% in CY24, driven by higher 4G penetration and digital adoption. The Parent Company, VEON, continues to invest in Pakistan’s digital ecosystem through OTT platforms and cloud solutions. The Company's financial risk profile remains adequate, with comfortable coverages, cashflows, and working capital cycle. Capital structure is leveraged, and borrowings are mainly comprised of long-term borrowings. In CY24, 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 dependent upon the sustenance of a leading market position, robust revenue growth and profitability, and a sound financial matrix. As capital structure becomes leveraged, maintenance of sound financial discipline is imperative to hold.

About the Entity
Pakistan Mobile Communications Limited – brand name ‘Jazz’ 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 holds ~15% of the issued share capital in the Company. The ultimate parent Company is VEON Ltd. VEON provides essential communications and digital services to ~160mln customers in Six of the world’s most dynamic countries. The Company's Board of Directors (BoD) is mainly composed of representatives from VEON. Mr. Aamir Ibrahim, the CEO, has over two decades of experience in the local and international markets.

About the Instrument
PMCL issued the third-rated, unsecured, privately placed short-term Sukuk-III (PPSTS-III) on dated April 28, 2025, while the Company’s PPSTS-II of PKR 15bn was redeemed on April 21, 2025. The issue amount for PPSTS III is up to PKR ~15bln and disbursed in 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 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.