VIS reaffirms entity ratings of Pak Telecom Mobile Ltd

January 29, 2025 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Pak Telecom Mobile Limited (PTML) at ‘AA-/A1’ (Double A Minus/A One).

Medium to long term rating of 'AA-' indicates high credit quality with strong protection factors.

Risk is modest but may vary slightly from time to time because of economic conditions.

Short-term rating of 'A1' suggests a strong likelihood of timely repayment of short-term obligations with excellent liquidity factors.

Outlook on the assigned ratings remains ‘Stable’.

The previous rating action was announced on November 22, 2023.

PTML, a public limited company, incorporated on July 18, 1998, provides cellular mobile telephony services in Pakistan.

The Company began operations in January 2001 under the brand name ‘Ufone’ and is a wholly owned subsidiary of Pakistan Telecommunication Company Limited (PTCL).

Assigned ratings reflect PTML’s strong profile and the support of its parent, Pakistan Telecommunications Corporation Limited (PTCL) (VIS rating: AAA/A1+), a state-owned entity with 62.18% shareholding held by the Government of Pakistan.

e& Group, the managing sponsor, holds an equity stake of 26% and has an "AA-" rating from S&P Global and "Aa3" from Moody's, both with stable outlooks.

The sponsor has consistently demonstrated financial support to PTML as needed.

Ratings are further supported by the sector’s favorable business risk profile, characterized by relative inelastic demand and medium-to-low competition.

The Company’s topline and gross margins have shown improvement, supported by rising demand for data and voice services, along with effective cost optimization measures.

However, its financial risk profile remains constrained due to a highly leveraged capital structure, which continues to pressure profitability.

The potential merger with Telenor, currently in the pipeline, is expected to significantly enhance the Company’s market share and operational efficiency.

The anticipated materialization of this merger, coupled with continued sponsor support from PTCL, remains important for ratings.

Copyright Mettis Link News