Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Upgrades Entity Ratings of Trans World Associates (Pvt.) Limited
Rating Type | Entity | |
Current (30-Aug-24 ) |
Previous (01-Sep-23 ) |
|
Action | Upgrade | Maintain |
Long Term | A+ | A |
Short Term | A1 | A1 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Trans World Associates (Pvt.) Limited (“the Company” or “TWA”) ratings reflect a strong business profile in the telecom industry of Pakistan. The company is engaged in providing different telecommunication services under the Long-Distance International license issued by the Pakistan Telecommunication Authority (PTA). In Pakistan, there are three submarine cable operators: PTCL, TWA, and Cybernet (Landing partner of recently established PEACE cable system). These operators handle the internet traffic in Pakistan, delivering bandwidth to cellular mobile operators, ISPs, corporate organizations, and SMEs. As bandwidth demand in Pakistan continues to grow, it is driving industry-wide revenue growth. In response, TWA is partnering in new submarine cables, which will significantly bolster the country’s connectivity infrastructure. TWA is the only private
telecom Tier-I operator (which is backed by owned and self- laid submarine cable network) in Pakistan which owns a 1,300 KM submarine cable system namely “TW1” and it is also a consortium member of the 20,000 KM long fiber optic cable system namely “SEA-ME-WE 5” with branch landing in Karachi. During CY23, the company topline clocked in at ~PKR 10,618mln, registering an increase of 21.4% (CY22: ~PKR 8,744mln). The Carrier and Wholesale business segments were the main revenue drivers, with bandwidth growth rates of 45% and 42%, respectively, due to the reliance of other operators on the infrastructure and connectivity provided
by TWA. The surge in online media streaming is linked to the rising internet usage. The company is diversifying its operations through its wholly owned subsidiary, TES, by offering Fiber to the Home (FTTH) services and vertically integrating to connect directly with end consumers. The board of TWA is more of an advisory nature as all members are well-experienced and possess technical expertise along with strapping industry- specific experience. The operations of the Company are augmented by a team of professionals and industry specialists. The Company has implemented a robust internal control system across the organization which is complemented by top-notch IT, business insight & intelligence, and financial reporting solutions. IPT (Internet Protocol Transit) lease is TWA’s prime product, and the core strength of the Company lies in its after-sales support and quality service assurance. TWA is moving forward with its expansion plans, including its role as a consortium member in the 21,700 km long SEA-ME-WE 6 undersea cable project, which is currently under construction. It’s anticipated that the project will reach its completion by the end of CY25. The Company’s financial risk profile is considered adequate with comfortable coverages, cashflows and working capital cycle. Capital structure is leveraged where borrowings are mainly comprised of long-term borrowings to support network and capacity expansion.
The ratings are dependent on the Company’s ability to maintain its leadership position within its business niches in a dynamic market environment. Achieving consistent revenue growth, improving margins & coverages, and delivering on prudent financial management, as outlined in company projections, will remain critical. As the capital structure becomes leveraged, maintenance of sound financial discipline is imperative to hold.
About
the Entity
TWA incorporated in Pakistan as a Pvt. ltd Company on October 01, 1980. Board consists of 7 directors. Mr. Junaid Iqbal is the CEO while Mr. Saad Muzaffar Waraich is the President of the Company, both having a strong telecom industry profile.