PACRA Assigns Initial Ratings to Airlink Communication Limited - PPSTS-V - PKR 4.0bln | Mar-25

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. Moreover, the local assembly industry has experienced substantial growth, increasing from 11.7mln units in CY19 to a record 31.8mln units in CY24 (CY23: 21.3mln) as reported by Pakistan Telecommunication Authority (PTA). This surge has been supported by the implementation of the Device Identification Registration and Blocking System (DIRBS), which has curtailed illegal imports, fostering domestic production and exports. Airlink holds an estimated 10% market share in mobile device assembly segment and ~22% in mobile phone distribution segment. During 9MFY25, the Company’s consolidated revenue declined by ~12.1% to ~PKR 85.6bln (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 focus more on its assembly segment, especially by increasing the production volumes of Tecno mobile phones. 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 cashflow. The Company’s ratings are contingent on its ability to uphold its market position in an industry that is rapidly transforming. Maintaining disciplined financial management, especially in terms of working capital and leverage, is critical to preserving these ratings—a commitment that the management steadfastly upholds.
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 47 days before maturity and continue fortnightly to ensure the full issue amount is available in the DPA five days before maturity. Principal and profit repayment will be made in a bullet payment.

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 has issued its fifth Rated, Secured, Privately Placed, Short-Term Sukuk-V on 25th March, 2025. While PPSTS-III, amounting to PKR 4.0bln, has been redeemed. Currently, Airlink's PPSTS-IV of PKR 3.0bln is currently available in the market. PPSTS-V will carry a markup rate of 6MK+1.75% and will have a six-month tenor.