PACRA Assigns Preliminary Ratings to Airlink Communication Limited - PPSTS-IX - PKR 3.0bln | TBI

Air Link Communication Limited (hereafter as ‘Airlink’ or ‘the Company’) is set to issue its ninth Rated, Secured, Privately Placed, Short-Term Sukuk-IX. The underlying instrument will be secured by a ranking charge over the Company’s Current Assets. The Issuer shall maintain and efficiently manage Debt Payment Account (“DPA”) under lien of the Investment Agent whereby the payment equivalent to PKR 1,000 million shall be made on or before 50 days before the maturity date, and subsequently 1/3rd of the remaining amount to be deposited every 15 days thereafter, such that amount equivalent to full issue amount is available in the DPA 05 days before the maturity date. Airlink primarily operates in two business verticals: i) mobile phone distribution and retail, and ii) assembly of smartphones and related products in Pakistan. The assigned ratings reflect Airlink’s solid business profile, underpinned by its established market position, longstanding relationships with leading global brands, and a diversified revenue base. Its vertical integration further strengthens its operations, from assembling mobile devices for leading brands to distributing them through a nationwide network. Airlink’s wholly owned subsidiary, Select Technologies, is the exclusive local assembler for Xiaomi Pakistan, a subsidiary of the global electronics giant Xiaomi Corporation. During CY25, the Pakistan Telecommunication Authority’s (PTA) latest statistics reflect a marginal ~3.7% decline in local mobile assembly, with total volumes at 30.21mln units (CY24: ~31.38mln), comprising roughly equal volumes of 2G devices (~15 million units) and smartphones (~16 million units). During 1QFY26, the Company’s consolidated revenue reduced by ~19.5% to ~PKR 104.379bln during FY25 (FY24: ~PKR 129.742bln), primarily due to a temporary moderation in demand following the imposition of higher taxes. The downtrend persisted in 1QFY26, with the Company reporting a topline of ~PKR 24.4bln, reflecting a modest YoY decline of ~6.5%. This decline was primarily attributable to the timing of new model launches in September, with the corresponding revenue expected to materialize in the subsequent quarter. However, the Company’s profitability margins have significantly improved over the years, supported by sustained gains in cost discipline and operational efficiencies. The assembly segment contributed ~58% to the overall revenue, while the distribution segment contributed ~42%. Airlink meets its working capital needs through a mix of bank borrowings and short-term papers. The Company has designed a discipline around the total leverage and the extent of commercial borrowings. At the absolute level, the leverage appears high, but net of cash and guarantee margin; the leverage turns out to be in the manageable range, which is the objective of raising the funds. The debt payment account, which is filled rigorously from internal cash flows, mitigates the risk as well. The Company successfully concluded a syndicated long-term financing facility for its expansion project at Sundar Economic Green Zone, which is expected to be availed in due course. The project has now partially completed, with mobile phone lines now Ready-for-Service (RFS).
The Company’s ratings are contingent on its ability to uphold its market position in a rapidly evolving, technology-driven industry. Continued adherence to agreed financial covenants, particularly maintaining full coverage of free cash flows from operations (FCFO) to gross sukuk obligations and preserving the desired level of leverage, will remain critical.

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 (CEO) and the family own a majority stake in the Company.

About the Instrument
The PPSTS-IX will carry a profit rate of 6MK+1.20% and has a tenor of six (6) months and will be redeemed in bullet at the expiry of the tenor. The profit will be paid at maturity. The purpose of this instrument is to finance the Company's working capital requirements for CKD imports.