Press Release

VIS Assigns Preliminary Rating to Short-Term Sukuk of Pakistan Telecommunication Company Limited

Karachi, December 18, 2023: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of ‘A-1+’ (A one plus) to PTCL’s proposed Rs. 5.0b Short-Term Sukuk (STS). The short-term rating of 'A-1+' denotes the highest certainty of timely payment, liquidity factors are outstanding, and safety is just below the risk-free short-term obligations of the GoP. The outlook on the assigned long-term rating is ‘Stable’.
The assigned ratings reflect PTCL's strategic market position as the country’s leading Integrated Information Communication Technology Company, having the largest fixed-line network and 71% market share. The ratings incorporate the issuer's strong sponsor profile, given that the GoP holds significant shareholding (62%) while Etisalat Group holds a 26% equity stake and management control. Having 46 years of operating experience, Etisalat is present in 16 countries and is one of the largest telecom operators in the world. The ratings also consider the financial soundness and management acumen of Etisalat Group; the Group is rated AA- and Aa3 by S&P and Moody's, respectively. The ratings are also underpinned by low business risk profile of the telecom sector owing to the non-cyclical nature of the industry, dependence of other operators on the infrastructure offered by the Company and low sensitivity to inflationary pressures on operations conducted. Moreover, business risk also factors in capital-intensive and highly regulated nature of the sector serving as natural high barrier to entry for new entrants. PTCL has wholly owned subsidiaries, including Pak Telecom Mobile Limited (UFONE), a mobile service provider, and a Microfinance Bank, U-Microfinance Bank Limited.
The ratings reflect the sound financial risk profile of the Company, marked by positive momentum in revenues, sizable margins and profitability indicators, adequate liquidity profile, and substantial debt-service coverages. Despite procurement of incremental long-term borrowings to fund capex and support PTML, gearing remained manageable and well aligned with the assigned ratings. Given, PTCL plans to inject further equity into PTML during the ongoing year to fund capital expenditure, gearing indicators of the Company are expected to trend upwards. However, the magnitude of the increase is expected to offset by positive trajectory of the PTCL’s profitability metrics coupled with the ongoing asset monetization strategy adopted.
PTCL’s management plans to offer a rated, unlisted, privately placed, STS of Rs. 5.0b to the eligible investors. The instrument arranged by the leading commercial bank will have a maturity of up to six months; the proceeds will be used to finance the working capital requirements of the Company. The Sukuk issue is based on Shirkat-ul-Aqd for participation in services/trade- based activity of PTCL. STS will have a profit rate of 6M KIBOR+20bps. The rating will remain contingent upon retention and improvement in market share coupled with maintenance of capitalization and liquidity indicators going forward.
For further information on this ratings announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext: 8010) or the undersigned (Ext: 207) on 021-35311861-64 or email at

Sara Ahmed

Industrial Corporates

Rating the Issue

VIS Issue/Issuer Rating Scale

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