VIS Assigns Top Rating to PTCL’s Short-Term Sukuk IX

Karachi: VIS Credit Rating Company Limited has assigned a preliminary rating of ‘A1+ (plim)’ to Pakistan Telecommunication Company Limited’s (PTCL) proposed PKR 2.5 billion Short-Term Sukuk IX (STS-IX), indicating a strong likelihood of timely repayment of short-term obligations. PTCL’s current entity ratings are ‘AAA/A1+’ with a stable outlook.

According to VIS Credit Rating Company Limited, PTCL, originally a state-owned entity, was incorporated as a public limited company in 1995. It took over the telecommunication business from the Pakistan Telecommunication Corporation as per the 1996 reorganization act. PTCL is listed on the Pakistan Stock Exchange and provides telecom services across Pakistan, including Azad Jammu and Kashmir and Gilgit Baltistan. PTCL also has subsidiaries such as Pak Telecom Mobile Limited and U-Microfinance Bank Limited, and it is in the process of acquiring Telenor Pakistan.

The company plans to issue the short-term Sukuk IX, based on a Shariah-compliant finance facility, to raise PKR 2.5 billion. This instrument, arranged by a commercial bank, will mature in up to six months, with proceeds used for working capital. The profit rate will equal the 3 Months KIBOR.

The ratings reflect the telecom sector’s medium business risk due to its non-cyclical nature and low inflation sensitivity. The sector’s capital-intensive technological demands and regulatory environment create high entry barriers. PTCL’s market position, as the leading integrated information communication technology company with the largest fixed-line network, strengthens this rating.

The ratings also account for PTCL’s strategic partnerships, with the Government of Pakistan holding a 62% stake and the Etisalat Group of UAE holding 26% with management control. Etisalat’s financial strength is evidenced by its ratings of AA- by S&P and Aa3 by Moody’s. PTCL’s financial profile is marked by positive revenue trends, strong margins and profitability, adequate liquidity, and effective debt-service coverage.

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