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Karachi: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Tower Power (Private) Limited (TPL) at ‘A-/A2′. These ratings reflect a good credit quality with adequate protection factors and a stable outlook, according to a press release issued by VIS. The ratings’ stability suggests that the company has a robust likelihood of timely repayment of short-term obligations and maintains sound short-term liquidity.
The reaffirmation underscores TowerCo’s medium to low business risk profile, largely attributed to the sector’s capital-intensive nature and the company’s long-term contracts with limited termination risk. An escalation clause in the Infrastructure Provisioning Fees (IPF) further strengthens this position. The TowerCo sector is expected to witness significant growth propelled by increased demand for 4G services and the anticipated rollout of 5G technology.
Financially, Tower Power has shown a positive trajectory, characterized by growing profitability. This is driven by higher base IPFs and escalation rates. Despite mobilizing short-term borrowings, the company maintains a balanced capital structure with adequate debt coverage.
The liquidity profile of TPL remains stable, supported by improving Funds from Operations (FFO). A moderate cash conversion cycle, facilitated by the absence of inventory days due to outsourced construction to the parent company, further enhances financial stability. Looking ahead, maintaining growth in net margins, sustaining liquidity, and preserving a stable capital structure are crucial for the company’s ratings.
The previous rating action was announced on February 21, 2024, and the current reaffirmation indicates continued confidence in Tower Power’s financial and operational stability.