The Pakistan Credit Rating Agency Limited
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PACRA Maintains Entity Ratings of Air Link Communication Limited

Rating Type Entity
(22-Nov-23 )
(22-Nov-22 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Air Link Communication Limited (“Airlink” or “the Company”) is primarily engaged in two business verticals; as mobile phones’ distributor & retailer, and now increasingly taking part in the assembling of smartphones & allied items in Pakistan. The ratings reflect Airlink’s sustainable business fundamentals underpinned by its solid market position. The Company is considered to be an official partner of multiple leading global brands to ensure diversified earnings from its business line. Pakistan’s telecom industry is moving forward at a reasonable pace. With expanding net coverage, myriad options of mobile devices available, ever-increasing demand for technology, and ubiquity of mobile phones and their uses among a wide cross-section of ~220mln people, the local market depicts a great potential (rapidly transitioning from feature phones to smartphones). Further, local assembling industry is evolving from infancy to mounting stage post-execution of DIRBS, curbing illegal import channels in the country to target domiciliary production and then exports. PTA also issued MDM authorizations to 30+ foreign & local companies to create more jobs in technical sector and enable consumers to buy locally. In nine months of Jan’23 to Sep’23, the local plants manufactured/assembled ~13.02mln handsets as compared to ~1.09mln commercially imported ones. Favorable policies, trade & investment liberalization, and healthy competition promoting shared industry prosperity. Following the trend, Airlink captures market share of around ~22% in mobile phone distribution. It has a nationwide network linked with over 16+ hubs & regional offices, 1100 + wholesalers, and 4,000+ retailers with after-sales support service centers in all major cities. During 1QFY24, Airlink witnessed a significant topline growth of ~171.9% on a year-on-year basis primarily on back of rising volume from assembling operating segment, followed by higher prices of mobile devices. The Company’s revenue contribution from assembly side fueled as an outcome of its backward integration strategy when Airlink joined hands with Xiaomi to manufacture/assemble its mobile phones and allied items in Pakistan by incorporating a wholly owned subsidiary “Select Technologies (Pvt) Limited”. Besides, the Company retained its profitability matrix during review period. Airlink’s capital structure is moderately leveraged; mainly comprised of STBs. Financial risk profile is reflected by improved working capital cycle, comfortable coverages, and healthy cash flows.
The ratings are dependent on the Company’s ability to sustain its relative position amidst highly changing industry environment. As business grows, prudent financial discipline - particularly in working capital structure, is essential to uphold the ratings.

About the Entity
Airlink was formed as a partnership firm in 2010 for import and distribution of IT-related products & services. In 2014, a new private company was incorporated simultaneously to take over the business of the partnership firm. During 2018, entire partnership business transferred to the Company's books and later in 2019, it got converted into a Public Unlisted Entity. During Sep-21, Airlink was eventually listed on PSX. Mr. Muzaffar Hayat (CEO) and the family own majority stake of the Company while remaining shareholding rests with General Public, Insurance Companies, Banks, DFIs, NBFIs, and others. Mr. Muzaffar Hayat holds an overall experience of three decades. He is being assisted by a team of qualified 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.