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

Air Link Communication Limited (hereafter as ‘Airlink’ or ‘the Company’) is set to issue its eighth Rated, Secured, Privately Placed, Short-Term Sukuk-VIII. The underlying instrument will be secured by a ranking charge over the Company’s Current Assets. The Issuer shall maintain and efficiently manage Debt Payment Account (“DPA”) under lien of the Investment Agent whereby the payment equivalent to PKR 1,000 million shall be made on or before 50 days before the maturity date, and subsequently 1/3rd of the remaining amount to be deposited every 15 days thereafter, such that amount equivalent to full issue amount is available in the DPA 05 days before the maturity date. Airlink primarily operates in two business verticals: i) mobile phone distribution and retail, and ii) assembly of smartphones and related products in Pakistan. The assigned ratings reflect Airlink’s solid business profile, underpinned by its established market position, longstanding relationships with leading global brands, and a diversified revenue base. Airlink’s 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. The market is rapidly shifting from feature phones to smartphones; however, mobile phone assembly volumes declined slightly by ~3.98% YoY to ~25.11mln units during 10MCY25 (CY24: 31.38mln units) due to excessive pre-buying in 2025 ahead of anticipated budgetary changes. Reflecting broader industry trends, the Company’s consolidated revenue reduced by ~19.5% to ~PKR 104.379bln during FY25 (FY24: ~PKR 129.742bln), primarily due to a temporary moderation in demand following the imposition of higher taxes. The downtrend persisted in 1QFY26, with the Company reporting a topline of ~PKR 24.4bln, reflecting a modest YoY decline of ~6.5%. This decline was primarily attributable to the timing of new model launches in September, with the corresponding revenue expected to materialize in the subsequent quarter. However, the Company’s profitability margins have significantly improved over the years, supported by sustained gains in cost discipline and operational efficiencies. The assembly segment contributed ~58% to the overall revenue, while the distribution segment contributed ~42%. Airlink meets its working capital needs through a mix of bank borrowings and short-term papers. The Company has designed a discipline around the total leverage and the extent of commercial borrowings. At the absolute level, the leverage appears high, but net of cash and guarantee margin, the leverage turns out to be in the manageable range, which is the objective of raising the funds. The debt payment account, which is filled rigorously from internal cash flows, mitigates the risk as well. The Company has successfully concluded a syndicated long-term financing facility for its expansion project, which is expected to be availed in due course. The project is nearing completion, with partial commissioning expected in the first quarter of CY26. Meanwhile, the associated terms and modalities are under evaluation and will have a bearing on the Company’s financial risk profile.
The Company’s ratings are contingent on its ability to uphold its market position in a rapidly evolving, technology-driven industry. Continued adherence to agreed financial covenants, particularly maintaining full coverage of free cash flows from operations (FCFO) to gross sukuk obligations and preserving the desired level of 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
The PPSTS-VIII will carry a profit rate of 6MK+1.20% and has a tenor of six (6) months, and will be redeemed in bullet at the expiry of Tenor. The profit will be paid at maturity. The purpose of this instrument is to finance the Company's working capital requirements for CKD imports.