PACRA Assigns Initial Rating to Airlink Communication Limited | Term Finance Facility | PKR 1.464bln | Jun’26

Airlink Communication Limited (“Airlink”) issued its first privately placed Islamic Term Finance Facility of PKR 1,464mln, with the first drawdown on June 30th, 2026 and the final drawdown on July 6th, 2026. The assigned rating draws comfort from the credit enhancement extended through an InfraZamin Pakistan Limited (IZP) guarantee, covering 75% of outstanding principal, and a layered security structure, alongside the borrower’s standalone credit profile. The guarantee has been approved, with ~71% of the total facility already drawn. In the event of non-payment, primary recourse is first to the DPA and DSRA, with the guarantee invoked only upon exhaustion of the DPA at the relevant instalment due date. Security is multi-tiered, comprising pari passu mortgages over three acres at SGSEZ and fixed/current assets, PKR 2,000mln annual receivables routing, cross-corporate and personal guarantees, and an irrevocable sponsor support undertaking covering all Project Account shortfalls. Payment certainty is supported by four dedicated Project Accounts, including an IZP-exclusive GPA. The Collection Account maintains 1.0x annual revenue coverage, with funds applied to the DPA/GPA, then DSRA, while the DPA is funded monthly and the DSRA maintained at 1x upcoming quarterly principal. Surplus is released only absent an Event of Default. Airlink is Pakistan’s leading mobile phone distributor, with partnerships spanning Xiaomi, Samsung, Apple, Tecno, Itel, and, more recently, Hisense. During 7MCY26 (Jan–Jul '26), local production declined by ~3.4% YoY to 17 million units, comprising ~9 million 2G phones and ~8 million smartphones, while commercial imports rose sharply (~92% YoY) to 2.66 million units. This trend reflects growing consumer preference for premium and technologically advanced devices, alongside competitive and demand-side pressures on domestic assemblers. In line with broader industry trends reflected in PTA statistics, the Company’s consolidated sales declined modestly by ~12.7% YoY during 9MFY26. Despite the softer topline performance, profitability improved materially across all levels. Financial risk profile of the Company remains adequate, supported by improving profitability and demonstrated market access. However, higher borrowing costs, elongated working capital cycle, and execution risk attached to expansionary capex remain monitorable factors. Going forward, the management is expecting improvement in profitability after execution of these initiatives and remain committed to comply with agreed gradual de-leveraging plan and financial discipline. Separately, the Company has entered electric mobility through its ‘AirV’ brand, with plans for an electric bike assembly facility at its Lahore complex; currently progressing at a fast pace.
Sustained compliance with a pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the planned deleveraging strategy, supported by optimal deployment of syndicated financing and IPO proceeds, along with the successful market penetration of newer product categories and scale-up of the SGSEZ facility, prudent liquidity management, and efficient working capital discipline, shall remain imperative.

About the Entity
Airlink is listed on the Pakistan Stock Exchange since Sep’21, with the sponsoring family, led by CEO Mr. Muzzaffar Hayat Piracha, collectively holding ~73.43% of ordinary shares.

About the Instrument
The Airlink portion forms part of a PKR 4,764mln syndicated Islamic facility arranged by The Bank of Punjab (lead arranger), BankIslami Pakistan, Askari Bank, and Pak China Investment Company, with PKR 3,300mln allocated to its subsidiary Select Technologies. Both sub-facilities are cross-collateralized and subject to cross-default provisions. Proceeds finance Airlink’s SGSEZ manufacturing facility, at 3M KIBOR + 115bps, with a ten-year tenor including a one-year grace period and repayment in up to 36 equal quarterly instalments.