PACRA Assigns Preliminary Rating to Airlink Communication Limited - Term Finance Facility - PKR 1.464bln | TBI

Airlink Communication Limited (“Airlink”) is set to issue its first privately placed Islamic Term Finance Facility of PKR 1,464mln, forming part of a PKR 4,764mln syndicated Islamic facility arranged by The Bank of Punjab, with PKR 3,300mln allocated to wholly owned subsidiary Select Technologies (Private) Limited (“Select”). Both sub-facilities are cross-collateralized and subject to cross-default provisions. Proceeds finance Airlink’s Sundar Green Special Economic Zone (SGSEZ) manufacturing facility. The facility will carry a floating profit rate of 3M KIBOR + 125bps, a ten-year tenor inclusive of a one-year grace period, and principal repayable in up to thirty-six (36) equal quarterly instalments with profit payable quarterly in arrears. The assigned rating draws comfort from the credit enhancement envisaged through an InfraZamin Pakistan Limited (IZP) guarantee, covering 75% of outstanding principal, and a layered security structure, alongside the borrower’s standalone credit profile. However, the approval remains under process and is currently in its final stages. As per the envisaged structure, primary recourse upon non-payment would first be directed to the Debt Payment Account (DPA) and Debt Service Reserve Account (DSRA), with guarantee invocation triggered only upon DPA exhaustion at an instalment due date. Security is multi-tiered: a first pari passu equitable mortgage over three acres at SGSEZ; first pari passu hypothecation over fixed assets; first pari passu hypothecation over current assets; an Airlink-specific annual receivables routing requirement of PKR 2,000mln; cross-corporate and personal guarantees; and an irrevocable sponsor support undertaking covering all Project Account shortfalls. Payment certainty is enforced through a structured three-tier waterfall: the Collection Account must hold 1.0x the outstanding facility in annual revenues; the DSRA is pre-funded before first disbursement at 1x upcoming quarterly principal and maintained throughout; and the DPA is funded in three equal monthly tranches, fully funded by each due date. Surplus collections are released to the Company only in the absence of any Event of Default. Airlink is Pakistan’s leading mobile phone distributor, with partnerships spanning Xiaomi, Samsung, Apple, Tecno, Itel, and, more recently, Hisense. During 3MCY26 (Jan–Mar’26), local mobile phone production declined ~2.6% YoY to 7.36 million units, comprising ~3.94 million 2G phones and ~3.42 million smartphones, while imports increased to 1.22 million units. This trend reflects growing consumer preference for premium and technologically advanced devices, alongside competitive and demand-side pressures on domestic assemblers. In line with broader industry trends reflected in PTA statistics, the Company’s consolidated sales declined modestly by ~12.7% YoY during 9MFY26. Despite the softer topline performance, profitability improved materially across all levels. Financial risk profile of the Company remains adequate, supported by improving profitability and demonstrated market access. However, higher borrowing costs, elongated working capital cycle, and execution risk attached to expansionary capex remain monitorable factors.
Sustained compliance with pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the post-commissioning deleveraging trajectory, timely commercialization, and operational stabilization of the SGSEZ facility, along with prudent liquidity and robust working capital management, shall remain imperative.

About the Entity
Airlink Communication Limited is a public limited company listed on the Pakistan Stock Exchange since September 2021. The sponsoring family, led by Mr. Muzzaffar Hayat Piracha (CEO), collectively holds ~73.43% of ordinary shares.