PACRA Maintains the Entity Ratings of Air Link Communication Limited

Air Link Communication Limited (‘Airlink’ or ‘the Company’) primarily operates in two business verticals; i) mobile phone distribution and retail, and ii) assembly of smartphones and related products in Pakistan. The Company’s ratings reflect its robust business fundamentals across both segments, underpinned by its growing market position and strategic partnerships with leading global brands, ensuring a diversified earnings portfolio. The ratings are further supported by the strong governance structure and presence of a professional management team that spearheaded the Company to achieve impressive growth in its topline along with the sustainability of a healthy profitability matrix. As per the data published by the Pakistan Telecommunication Authority (PTA), Pakistan’s mobile teledensity has reached ~80%. Over the past few years, the mobile industry has rapidly shifted from relying on imported devices to locally assembled products. During 9MCY24, ~22.59mln devices were assembled locally, while commercial import accounted for ~1.17mln devices, representing a ~42% growth on an annualized basis, compared to ~21.28mln assembled and ~1.58mln imported devices in CY23. Airlink is actively engaged in the assembly of Tecno smartphones, besides being the sole assembler of Xiaomi smartphones through its wholly-owned subsidiary, Select Technologies (Pvt.) Ltd. Moreover, Airlink is among the largest distributors in the country, commanding a market share of ~22% in the distribution segment. The Company has established an extensive nationwide network linked with over 16 hubs and regional offices, more than 1100 wholesalers, and 4,000 retailers, supported by after-sales service centers in all major cities. During FY24, Airlink reported a consolidated topline of PKR 129,742mln, marking a substantial growth compared to last year, primarily driven by higher volumes, following the relaxation of import restrictions on mobile CKDs, which allowed the Company to operate at optimal capacity. Concurrently. rising mobile phone prices also supported the revenue growth. The assembly segment contributed ~72% to the overall revenue while the contribution from the distribution segment remained ~28%. The Company’s net profit margin improved marginally during the year, exhibiting a consolidated profit after tax of PKR 4,624mln. However, in 1QFY25, the revenue declined by ~40% on an annualized basis, due to inventory build-up and dampened demand, exacerbated by price increases linked to additional tax implications. Airlink’s financial risk profile is characterized by an improved working capital cycle, comfortable coverages, and healthy cashflows. Capital structure is leveraged where short-term borrowings comprise ~87.9% of the total debt portfolio. Moving forward, the Company is focused on diversifying its product range by introducing Xiaomi smart TVs. Additionally, the Company has finalized an exclusive agreement with Acer Gadget Inc. to assemble and market their product range comprising laptops and tablets in Pakistan which is expected to further solidify the Company’s profile.
The ratings are contingent on the Company’s ability to sustain its market position amidst a rapidly changing industry environment. As business grows, prudent financial discipline, particularly regarding the working capital structure and leverage, is essential to uphold the ratings. A principle to which management is fully committed.

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 Piracha (CEO) and the family own a majority stake of ~73.43% in the Company while the remaining shareholding rests with the general public, insurance companies, banks, DFIs, NBFIs, and others.