VIS reaffirms entity ratings of PTCL

November 29, 2024 (MLN): VIS Credit Rating Company Limited (VIS) has finalized the short-term rating of Pakistan Telecommunication Corporation (PTC) Short Term Sukuk VII (STS-VII) at ‘A1+’, according to the press release issued.

The short-term rating of 'A1+' denotes the highest certainty of timely payment, liquidity factors are outstanding, and safety is just below the Pakistan government's risk-free short-term obligations (GoP).

The outstanding entity ratings of PTC are ‘AAA/A1+’ with a ‘Stable’ outlook. The previous rating action was announced on November 7, 2023.

PTC originally a state-owned entity, was established as a public limited company on December 31, 1995, succeeding Pakistan Telecommunication Corporation (PTC) under the Pakistan Telecommunication (Re-organization) Act of 1996

PTC's portfolio includes wholly owned subsidiaries such as Pak Telecom Mobile Limited (PTML) and U-Microfinance Bank Limited.

PTC has issued a rated, unsecured, privately placed Sukuk (STS-VII) amounting to Rs5 billion, structured under Shariah principles.

Furthermore, the Sukuk has a maturity of up to 6 months, with the proceeds intended to finance the company’s working capital requirements.

The STS-VII carries a profit rate of 6-month KIBOR plus 10 basis points per annum.

The assigned ratings are underpinned by the telecom sector's medium business risk profile owing to the industry's non-cyclical nature with low sensitivity to inflationary pressures on operations conducted.

The assigned ratings reflect PTC’s market position boasting the largest fixed-line network with a market share exceeding 71%, the press release added.

The ratings also factor in the company’s robust sponsor profile, supported by a substantial 62% shareholding from the GoP and a 26% equity stake held by Etisalat Group of UAE.

Additionally, the ratings also consider the financial soundness and management expertise of the Etisalat Group, which holds credit ratings of AA- from S&P and Aa3 from Moody’s.

The ratings incorporate a sound financial risk profile of the Company, marked by positive momentum in revenues, sizable margins and profitability indicators, adequate liquidity profile, and debt-service coverages.

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