The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Upgrades Entity Ratings of Airlink Communication Limited

Rating Type Entity
Action Upgrade Maintain
Long Term A A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Airlink Communication Limited (hereafter referred as ‘Airlink’ or ‘the Company’) is primarily engaged in the distribution business followed by retailing and assembling of smartphone devices in Pakistan. The ratings reflect Airlink’s sustained fundamentals underpinned by its solid market position and diversified earnings from its core business lines. Telecom is one of the fastest growing sectors of Pakistan’s economy. The government has given industrial status to the telecom sector in the federal budget for fiscal year 2021-22. Telecom industry in Pakistan has shown growth over the period on account of trade & investment liberalization, favorable policies, and healthy competition. Regulatory duty on mobile phone imports has been increased to promote local import substitutes and attract foreign investment. Consequently, the Company now captures market share of around ~21% in mobile distribution. Topline continued to witness reasonable growth on a Year-on-Year basis owing to the formidable local demand of mobile handsets. Airlink has been successful to effectively manage business risks by partnering up with multiple global mobile phone brands including Samsung, Itel, Techno, Iphone, Xiaomi, Alcatel, & Huawei. The Company conducted the largest IPO in Pakistan worth PKR 6.43bln during Aug’21. Proceeds from IPO are to finance working capital requirements and expand the Company’s distribution & retail network. Funds received from issuing stocks has ramped up company’s equity. Thus, making the capital structure moderately leveraged mainly comprising of short-term borrowings. With its legal status converted into a Public Listed Entity in Sep’21, several improvements in the governance structure are witnessed including induction of three independent directors. Lately, Airlink joined hands with Xiaomi, a global electronics & smartphones brand, to manufacture Xiaomi mobile phones in Pakistan through its wholly owned subsidiary “Select Technologies (Pvt) Limited”. Financial Profile of the Company is considered adequate with comfortable coverages, upright working capital management and healthy cash flows.
The ratings are dependent on the company’s ability to sustain its relative position and positive performance indicators amidst growth. As business volumes grow, prudent financial discipline - particularly in capital structure, is essential to uphold the ratings.

About the Entity
Back in 2010, Airlink was formed as a partnership firm for the import & distribution of IT-related products & services. Later in 2014, a new private company was incorporated simultaneously to take over the business of the partnership firm running as a family business. After July’18 , entire partnership business transferred to the company's books. The Company got converted to a Public Unlisted Entity in Apr'19. The company has been listed on ‘PSX’ effective from Sep’21. Mr. Muzaffar Hayat (CEO of Airlink) and the family of his late brother - Mr. Muazzam Hayat owns ~49% of shares in the company, Mr. Yasir Hayat (cousin of CEO) owns 24% of shares while the remaining shareholding rests with General Public, Insurance Companies, Banks, DFIs, NBFIs, and others. Mr. Muzaffar Hayat is the CEO of the company and holds overall experience of 27 years. He is being assisted by a team of professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.