PACRA Assigns Initial Ratings to Airlink Communication Limited - PPSTS-VI - PKR 3.0bln | Jul-25

Airlink Communication Limited (“Airlink” or “the Company”) operates in two key business verticals: (i) distribution and retail of mobile phones and (ii) assembly of smartphones and related products in Pakistan. The Company’s assigned ratings reflect strong business fundamentals, supported by its growing market position and partnerships with renowned global brands, ensuring a diversified revenue stream. Its vertical integration further strengthens its operations, from assembling mobile devices for leading brands to distributing them through a nationwide network. Additionally, Airlink has made substantial investments in its wholly owned subsidiary, Select Technologies (Pvt.) Limited, which assembles mobile phones exclusively for Xiaomi Pakistan (Pvt.) Limited, a subsidiary of Xiaomi Corporation, a leading global brand from China. Xiaomi continues to expand its presence in Pakistan with both existing and new products. The local industry is advancing steadily, fueled by expanding network coverage, a wide array of mobile devices, increasing technological demand, and the widespread adoption of mobile phones among Pakistan’s ~225mln population. The market is rapidly shifting from feature phones to smartphones; however, mobile phone assembly volumes declined by ~6% YoY to ~17.83mln units during 7MCY25 (CY24: 31.8mln units) due to excessive pre-buying in June 2024 ahead of anticipated budget changes. In line with this trend, the Company’s consolidated revenue declined by ~12.1% to ~PKR 85.6bln during 9MFY25 (FY24: ~PKR 129.7bln), mainly due to a temporary dip in demand caused by higher taxes. However, the Pakistan Telecommunication Authority’s (PTA) latest statistics indicate a rebound, with 3.59mln units assembled in July 2025 (up 123% YoY), and industry sales are projected to grow by 7–8% YoY over the next 12 months, supported by normalized base effects and easing inflation. Moving forward, Airlink plans to strengthen both its assembly and distribution segments. The Company’s capital structure is leveraged, relying primarily on short-term borrowings, including debt instruments, to meet working capital needs in the assembly and distribution segments. This reliance has increased following the recent imposition of sales tax in FY25. The financial risk profile demonstrates adequate working capital cycle, coverage ratios and cashflow.

The underlying instrument is secured by a ranking charge over the Company’s current assets. The Issuer shall maintain and efficiently manage Debt Payment Account (“DPA”) under lien of the Investment Agent whereby the payment equivalent to PKR 1,000 million shall be made on or before 50 days before the maturity date, and subsequently 1/3rd of the remaining amount to be deposited every 15 days thereafter, such that amount equivalent to full issue amount is available in the DPA 05 days before the maturity date.
The Company’s ratings are contingent on its ability to uphold its market position in an industry that is rapidly transforming. Continued adherence to agreed financial covenants, particularly maintaining full coverage of free cash flows from operations (FCFO) to gross sukuk obligations and preserving the desired level of leverage, will remain critical.

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
Airlink has issued its sixth Rated, Secured, Privately Placed, Short-Term Sukuk-VI on July 21st, 2025. While PPSTS-IV has been redeemed and PPSTS-V’ DPA has been filled and will be redeemed in a due course of time. Currently, SELECT’s PPSTS-II of PKR 3.5bln is the available Sukuk in the market. PPSTS-VI carries a markup rate of 6MK+1.75% and will have a six-month tenor.