PACRA Assigns Initial Ratings to Airlink Communication Limited - PPSTS-XIV - PKR 2.0bln | Sep’26

Airlink Communication Limited (hereafter 'Airlink' or 'the Company') issued its fourteenth Rated, Secured, Privately Placed, Short-Term Sukuk-XIV on September 21st, 2026. The underlying instrument is 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 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 9MCY26 (Jan–Sep), local mobile phone production and assembly declined by ~7% YoY to 21.08 million units, compared to 22.78 million units in the corresponding period last year. Meanwhile, commercial imports surged by ~90% YoY to 2.85 million units. Local production continued to meet ~88% of domestic demand, although the rising share of imported handsets, particularly amid growing competition from imported smartphones, reflects mounting competitive 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 sales slightly grew by ~1.6% YoY in 1QFY27 and 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 expanded into electric mobility under its newly launched brand ‘AirV’, introducing an 11-model electric bike line-up. The initiative marks a step towards product diversification and broadening the Group’s market reach.
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-XIV carries 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.