PACRA Assigns Initial Ratings to Airlink Communication Limited- PPSTS-IV - PKR 3.0bln | Jan-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 growing steadily, driven by expanding network coverage, diverse mobile devices, rising tech demand, and widespread mobile adoption among Pakistan's ~225mln population. The local assembly industry has surged from 11.7mln units in CY19 to a record 31.8mln units in CY24 (CY23: 21.3mln), according to Pakistan Telecommunication Authority (PTA). The implementation of the Device Identification Registration and Blocking System (DIRBS) reduce illegal imports, fostering domestic production and boosting exports. Airlink holds an estimated 10% market share in mobile device assembly segment and ~22% in mobile phone distribution segment. During 6MFY25, the Company’s consolidated revenue declined by ~11.6% to ~PKR 57bln (FY24: ~PKR 129bln), mainly due to a temporary dip in demand caused by higher taxes. However, as per the management’s representation market price adjustments are now assimilated, and volumes are once again rising. Moving forward, Airlink plans to focus more on its assembly segment, especially by increasing the production volumes of Tecno mobile phones. 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 coverage ratios and a healthy EBITDA. The company's ratings depend on maintaining its market position and disciplined financial management, particularly in working capital and leverage, which management is committed to upholding.
The instrument is backed by a ranking charge on the Company’s current assets. Payments to the Debt Payment Account (DPA), held under the Investment Agent's lien, commence 47 days prior to maturity and occur fortnightly. Principal and profit will be repaid in a single bullet payment.

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 fourth Rated, Secured, Privately Placed, Short-Term Sukuk-IV on January 20th, 2025 and is also set to issue another Sukuk of PKR 4.0bln. Meanwhile, the PPSTS-III of PKR 4.0bln was redeemed on 24th March, 2025 and currently PPSTS of PKR 4.0bln of Select Technologies (Pvt.) Ltd. is available in the market. PPSTS-IV carries a markup of 6MK+1.75% with a tenor of six months.