PACRA maintains entity ratings of Air Link Communication

November 22, 2022 (MLN): Pakistan Credit Rating Company (PACRA), has maintained entity ratings of Air Link Communication Limited (AIRLINK) at “A” for the long term and “A1” for the short term with a stable outlook forecast.

As per the rating agency, Airlink’s sustainable business fundamentals are underpinned by its solid market position.

The company is the official partner of multiple leading global brands to ensure diversified earnings from its core business line, it added.

Pakistan’s telecom industry is one of the fastest-growing segments of the economy. With the successful execution of DIRBS, the local assembly of the industry has evolved from its infancy to the well-growing stage.

With the successful execution of DIRBS, the local assembly industry has evolved from infancy to a well-growing stage. The government of Pakistan introduced a comprehensive Mobile Manufacturing Policy to attract manufacturers to Pakistan and establish their plants, the report added.

Moreover, PTA has issued MDM authorizations to 30+ foreign & local companies to create more jobs in the technology sector and enable consumers to buy locally. During the first nine months (Jan-Sep) of 2022, the local plants manufactured/assembled ~16.7mln handsets as compared to ~1.24mln commercially imported ones.

Following, the Company captures a market share of around ~22% in mobile phone distribution. On an accumulated basis, the top line of the Company continued to witness reasonable growth on a Year-on-Year basis primarily on the back of higher prices, followed by more volume.

During FY22, Airlink joined hands with Xiaomi, a global electronics & smartphone brand, to manufacture/assemble Xiaomi mobile phones in Pakistan through its wholly owned subsidiary “Select Technologies (Pvt) Limited” for which the commercial production was initiated in Mar-22.

Further, the Company retained its profitability matrix despite tough macroeconomic conditions and the high cost of doing business. Funds received through IPO ramped up Company’s equity base; keeping the capital structure moderately leveraged mainly comprised of STBs.

The ratings are dependent on the Company’s ability to sustain its relative position amidst changing industry environment. As the business grows, prudent financial discipline - particularly in working capital structure, is essential to uphold the ratings.

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