PACRA Assigns Preliminary Ratings to Airlink Communication Limited - PPSTS-X - PKR 2.0bln | TBI

Air Link Communication Limited (hereafter as ‘Airlink’ or ‘the Company’) is set to issue its tenth Rated, Secured, Privately Placed, Short-Term Sukuk-X. The underlying instrument will be secured by a ranking charge over the Company’s Current Assets. 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 1HFY26, the Company’s consolidated revenue declined slightly by ~6.6% to ~PKR 48.771bln (FY25: ~PKR 104.379bln, FY24: ~PKR 129.742bln), primarily attributable to the pending new model and product launches, with the corresponding revenue expected to materialize in the subsequent quarters. 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. On the operational front, Airlink has invested over PKR 3.0bln in its new facility at the Sundar Green Special Economic Zone, where the mobile phone assembly lines have achieved Ready-for-Service (RFS) status. With the project partially completed, the Company is positioned to scale up manufacturing capacity and introduce a more diversified product portfolio in the market. Going forward, Airlink also intends to deleverage its balance sheet, which is contingent upon the availability of the syndicated long-term facility.
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 Sukuk-X will carry a markup of 6MK+1.20%, with a tenor of six months. The repayment of principal and markup will be done in a bullet upon maturity. The purpose of the instrument is to finance the Company’s growing working capital requirements. The issue incorporates a built-in call option, enabling the Company, after 60 days from the date of first disbursement, to exercise the option either in full or in part by providing fifteen (15) days’ prior written notice to the Lenders/Financiers. The redemption under the Call Option is intended to be funded through the proceeds of the syndicated financing facility of ~PKR 4,764 million.