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

Airlink Communication Limited (hereafter ‘Airlink’ or ‘the Company’) is set to issue its twelfth Rated, Secured, Privately Placed, Short-Term Sukuk-XII. The underlying instrument will be secured by a ranking hypothecation charge on all the present and future current assets of the Company and a Lien & Right of set off over the Account (DPA). 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, 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, more recently, Hisense. During 5MCY26 (Jan–May ’26), local mobile phone production declined ~11.26% YoY to 11.17 million units, comprising ~6.25 million 2G phones and ~4.92 million smartphones, while imports increased to 1.91 million units. The divergence between declining local output and rising imports reflects growing consumer preference for premium, technologically advanced handsets, while also highlighting 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. However, the Company’s profitability margins have significantly 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. This funding profile is expected to improve following two key developments: the drawdown of approximately PKR 3.4bln (71%) under the Group's long-term syndicated finance facility and SELECT's successful IPO, which raised ~PKR 3.02bln. In line with the previously communicated plan, these proceeds are intended to support incremental working capital requirements arising from product diversification, facilitating a gradual replacement of short-term borrowings with longer-tenor funding and equity. Although gross leverage remains elevated, net leverage, after adjusting for cash, guarantee margins, and the strengthened equity base following the IPO, remains within a manageable 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 timely deployment of the syndicated facility and IPO proceeds, execution of the pre-agreed deleveraging strategy, and successful commercialization of newer product categories will remain important determinants of the Group's financial flexibility and credit profile.
Sustained compliance with 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 operational stabilization 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-XII 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.