PACRA Assigns Initial Ratings to Airlink Communication Limited - PPSTS-XII - PKR 3.0bln | Jul-26

Airlink Communication Limited (hereafter ‘Airlink’ or ‘the Company’) has issued its twelfth Rated, Secured, Privately Placed, Short-Term Sukuk-XII on July 22nd, 2026. The underlying instrument will be secured by a ranking hypothecation charge on all the present and future current assets of the Company and 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 Hisense. During 6MCY26 (Jan–Jun '26), local mobile phone production declined ~8% YoY to 13.10 million units, comprising ~7.32 million 2G phones and ~5.78 million smartphones, while commercial imports rose sharply (~197% YoY) to 2.55 million units, lifting total mobile phone supply ~4% to 15.65 million units; local assembly nonetheless continued to meet ~85% of domestic demand. 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. 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 is expecting improvement in profitability after execution of these initiatives. Separately, the Company has announced its entry into electric mobility through a newly launched brand, 'AirV', under which it plans to set up an electric bike assembly facility at its existing SGSEZ complex in Lahore; however, the initiative is at an early.
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-XII 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.