PACRA Maintains Entity Ratings of Advance Telecom (Pvt.) Limited

Advance Telecom (Pvt.) Limited (“ATPL” or “the Company”) retains its position as one of Pakistan’s foremost distributors of mobile handsets, accessories and consumer technology products. The Company’s long standing partnerships with principal brands including Tecno, Itel and Nokia continue to anchor its industry presence by ensuring consistent model availability and reinforcing its commercial franchise in a market characterized by thin spreads, intense price competition and rapid inventory turnover. ATPL’s operational alignment with Enercom Technologies (Pvt.) Ltd., a local assembler, further enhances supply consistency and responsiveness to product diversification. The nationwide distribution footprint remains extensive, covering key urban and semi urban geographies and serving both retail and institutional clientele. The mobile handset sector in FY25 entered a more normalized phase after an exceptionally high FY24. Industry volumes last year were artificially elevated as distributors accelerated handset imports ahead of the implementation of sales tax on mobile devices, resulting in significant pre July stocking and an abnormally high benchmark. With the dissipation of this one off effect, demand reverted to typical replacement driven levels, further challenged by soft consumer purchasing power and a slowdown in wholesale institutional buying. Within this environment, the structural reality of the sector became even more pronounced, where extremely low spreads and tight operating margins limit earnings visibility and restrict organic growth potential for distributors. This margin compressed backdrop has been a significant catalyst for ATPL’s strategic decision to enter the energy value chain by expanding into solar panels, inverters and batteries. The move reflects a deliberate shift toward a segment that offers comparatively better pricing flexibility, higher value retention and a more favorable margin profile relative to handset distribution. ATPL reported revenues of PKR 37 billion in FY25 compared to PKR 51 billion in FY24, reflecting a 27 percent decline from the inflated base. Profitability metrics moderated accordingly, with gross margin at 4.2 percent compared to 4.6 percent, operating margin at 2.8 percent compared to 3.9 percent and PBIT margin at 2.6 percent compared to 3.7 percent. Net margin remained steady at 0.7 percent owing to prudent cost management and operational discipline. Returns softened, with ROA at 3.1 percent and ROE at 13.5 percent. Working capital pressures intensified due to higher inventory levels and elongated receivable cycles, extending the cash conversion cycle. Short term borrowings stood at PKR 4.5 billion compared to PKR 5 billion in FY24, while equity improved marginally to PKR 1.9 billion. Off balance sheet exposures remain sizeable and require continuous oversight. The governance structure continues to be family led with centralized decision making. While management demonstrates strong sectoral insight and execution capability, the absence of independent oversight and an internal audit function constrains governance depth. Sponsor support remains an important credit strength, evidenced historically during periods of operational strain.
The ratings remain dependent on ATPL’s ability to sustain its market position, restore margin resilience in a low spread operating environment, strengthen governance practices and generate improved liquidity to support its leveraged balance sheet while advancing its diversification into the energy value chain.

About the Entity
Advance Telecom (Pvt.) Limited (‘ATPL’ or ‘the Company’) was incorporated on March 2, 2016 in Karachi, though the Advance Telecom group has been operating since 1996. The Company commenced commercial operations in November 2020 and is primarily engaged in the nationwide distribution of mobile phones, smart devices, accessories, and related products. ATPL holds distribution agreements for Tecno, Itel, and Nokia. In FY25, the Company expanded its portfolio by entering the solar products segment, adding the trading of solar panels, inverters, and batteries to diversify its revenue base.