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

Airlink Communication Limited (hereafter 'Airlink' or 'the Company') is set to issue its fifteenth Rated, Secured, Privately Placed, Short-Term Sukuk-XV of PKR 3,000 million. The underlying instrument will be secured by a ranking hypothecation charge on all the present and future current assets of the Company. 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 evolving business profile, underpinned by its established market position, longstanding relationships with leading global brands, and a diversified revenue base. Airlink's subsidiary, Select Technologies, is the local assembler for Xiaomi Pakistan, a subsidiary of the global electronics giant Xiaomi Corporation. Airlink is one of Pakistan's leading mobile phone distributors, with partnerships spanning Xiaomi, Samsung, Apple, Tecno, Itel, and Hisense. During 8MCY26 (Jan–Aug), local production declined by ~7.3% YoY to 18.66 million units, comprising ~11 million 2G phones and ~8 million smartphones, while commercial imports rose sharply (~73.4% YoY) to 2.74 million units. The divergence between continued softer local output and rising imports reflects growing consumer preference for premium, technologically advanced handsets, while also highlighting sustained competitive and demand-side pressures on domestic assemblers. In line with broader industry trends reflected in PTA statistics, the Company’s consolidated sales declined by ~14% YoY to ~PKR 90bln during FY26 (FY25: ~PKR 104bn). However, the Company’s profitability margins have continuously improved over the years, supported by sustained gains in cost discipline and operational efficiencies. Airlink continues to fund its working capital requirements through a combination of bank borrowings and short-term debt instruments. The Group's long-term syndicated facility, ~71% drawn (PKR 3.4bln), has been deployed towards capital expenditure for the new Sundar facility. Of SELECT's ~PKR 3.02bln IPO proceeds, ~43% (~PKR 1.3bln) supports incremental working capital arising from product diversification, facilitating a partial replacement of short-term borrowings with equity. Although gross leverage remains elevated, net leverage, after adjusting for cash, guarantee margins, and the strengthened equity base post-IPO, remains within a targeted range. Furthermore, the disciplined maintenance of the DPA, funded through internal cash generation, provides an additional liquidity buffer and mitigates refinancing risk. Going forward, the management remains committed to comply with agreed gradual de-leveraging plan and financial discipline. Separately, the Group has announced its entry into electric mobility under the newly launched brand ‘AirV’. The Board has approved an electric bike assembly facility at its existing SGSEZ complex in Lahore, with construction and development progressing rapidly. The project is expected to further diversify the Group’s product portfolio.
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 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 Sukuk-XV will carry a markup of 6MK+1.10%, with a tenor of six months. The repayment of principal and markup will be done in a bullet upon maturity. The purpose of the instrument is to finance the Company’s working capital requirements to import CKDs/SKDs.