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Karachi, VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Pak Telecom Mobile Limited (PTML) at ‘AA-/A-1’, reflecting high credit quality and strong protection factors. The medium to long-term rating of ‘AA-‘ indicates strong creditworthiness with minimal risk variation due to economic changes. The short-term rating of ‘A-1’ signifies a high likelihood of timely payment and excellent liquidity factors. The outlook on these ratings is stable, unchanged from the last rating action announced on July 14, 2022.
According to VIS Credit Rating Company Limited, the ratings of PTML are bolstered by its association with Pakistan Telecommunication Company Limited (PTCL), which is majority-owned by the Government of Pakistan (62.2%) and partially by the Etisalat Group (26%) with management control. PTCL holds ‘AAA/A-1+’ ratings from VIS, and Etisalat has ‘AA-‘ and ‘Aa3’ ratings from S&P Global and Moody’s, respectively. The sector’s low business risk profile, characterized by its non-cyclical nature and high entry barriers, also supports these ratings.
Post-acquisition of 4G Spectrum in September 2021, PTML experienced improved topline and Average Revenue Per User (ARPU) levels. However, the financial risk profile remains challenged by reduced margins, consistent losses, inadequate cash coverages, and a highly leveraged capital structure. To address these issues, management has implemented cost-cutting strategies, including technological optimization, vendor negotiation, revenue diversification, and price increases. These initiatives are expected to boost gross margins while preserving service quality and financial stability. Management has also indicated that any future financial support will likely be through equity injections, with no plans for additional long-term debt from commercial banks. The ratings are strongly influenced by the sponsor’s support through equity injections and will depend on the restoration of profitability, as well as improvements in liquidity and gearing indicators in the medium term.
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