PACRA Maintains the Entity Ratings of Air Link Communication Limited

Air Link Communication Limited (hereafter as ‘Airlink’ or ‘the Company’) 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. 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, 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 Company has established an extensive nationwide network linked with over 16 hubs and regional offices, more than 1,000 wholesalers, and 5,000+ retailers, supported by after-sales service centers in all major cities. 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; however, mobile phone assembly volumes declined slightly by ~3.2% YoY to ~22.78mln units during 9MCY25 (CY24: 31.38mln units) due to excessive pre-buying in June 2024 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 contribution from the distribution segment remained ~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 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 is planning to raise long term debt for the expansion project. The related modalities are being evaluated and would have 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 Piracha (CEO) and the family own a majority stake of ~73.43% in the Company while the remaining shareholding rests with the general public, insurance companies, banks, DFIs, NBFIs, and others.