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The Pakistan Credit Rating Agency Limited
Press Release

Date
01-Aug-24

Analyst
Muhammad Atif Chaudhry
Atif.Chaudhry@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Ratings of Multinet Pakistan (Pvt.) Limited

Rating Type Entity
Current
(01-Aug-24 )
Previous
(01-Aug-23 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Multinet Pakistan (Pvt.) Limited (the "Company") rating reflects the strong sponsor profile, satisfactory market position, and adequate financial standing of the Company. The principal activity of Multinet Pakistan (Pvt.) Limited is to provide telecommunication, electronic media and connectivity infrastructure and solutions, including internet services, design, development, implementation of networks. Moreover, value added services include voice services, data center, audio and video conferencing, hosting applications and servers. The Multinet brand encompasses a range of services, including Datacom, MyCloud, MyMS, Data Center, Clarity, and TowerNet. Additionally, 25% of cellular traffic and 50% of financial market traffic runs through Multinet Pakistan Pvt. Limited. The assigned rating takes into account the good governance framework, strong control environment, and qualified and experienced management team. Moreover, the Company has enhanced its governance frameworks, reflected in the strengthening of the Board. The Company exhibits strong financial transparency, supported by the appointment of EY and Baker Tilly as internal and external auditors, respectively. The Company has developed an effective mechanism for the identification, assessment, and reporting of all types of risk arising out of the business operations.
Multinet Pakistan (Pvt.) Limited's income stream remained stable, predominantly driven by the Enterprise Business and Carrier International segments. The Company has observed a decline in revenue, predominantly influenced by volatility in non-core business activities. Nevertheless, the core operations have continued to show steady growth. The overall profitability experienced a dip, attributed to inflationary pressures and an uptick in financing costs. Additionally, income from deposits and investments in associates provides further support to the bottom line. The financial risk profile is marked by a low-leverage capital structure, as demonstrated by a debt-to-capital ratio of approximately 24.4% as of CY23.
The ratings are dependent on the management's ability to realize the projected margins, and its strong capital structure. Prudent management of working capital cycle and coverage ratios remains imperative. However, any significant delay in realizing the projected cashflows would have a negative impact on ratings.

About the Entity
Multinet Pakistan (Pvt.) Limited was incorporated in 1996, as a private limited company. Primary business activity of the Company is to provide telecommunications infrastructure and services. Mr. Adnan Asdar Ali is a major shareholder, having a 99.9% stake. Whereas, Mr. Adnan Hayat Zaidi heads the Company as the CEO. The product slate of the Company comprises provision of broadband & data connectivity related services to corporates, long-haul and metro optical fiber infrastructure requirements for telecom operators, international voice termination, fixed line telephony, and partnering with global carriers to provide broadband and data connectivity solutions to their customers operating in Pakistan. Moreover, it also provides value added services such as voice services, data center, audio and video conferencing, hosting applications and servers.

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.