Press Release

VIS Finalizes Short Term Rating of Short-Term Sukuk IV of Pakistan Telecommunication Company Limited (PTCL)

Karachi, July 08, 2024: VIS Credit Rating Company Limited (VIS) has finalized short-term rating of PTCL’s Short Term Sukuk IV (STS-IV) at ‘A-1+’ (A one plus). 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 Government of Pakistan (GoP). The outstanding entity ratings of PTCL are ‘AAA/A-1+’ with a ‘Stable’ outlook.

Pakistan Telecommunication Company Limited (PTCL), initially a state-owned entity, was incorporated as a public limited company on December 31, 1995 taking over the telecommunication business from Pakistan Telecommunication Corporation (PTC) as per the Pakistan Telecommunication (Re-organization) Act 1996. Listed on the Pakistan Stock Exchange Limited (PSX) with headquarter in Islamabad, PTCL provides a wide range of telecommunication services across Pakistan, including Azad Jammu and Kashmir and Gilgit Baltistan. PTCL also has wholly owned subsidiaries, which include Pak Telecom Mobile Limited (PTML) and U-Microfinance Bank Limited. In addition, PTCL is also in the process of acquiring Telenor Pakistan (Private) Limited.

PTCL has issued a rated, unsecured privately placed, STS-IV of PKR 5.0 bln, based on Shariah principles. The STS-IV was issued on 12th June 2024. The instrument being arranged by a leading commercial bank have a maturity of up to six months; the proceeds will be used to finance the working capital requirements of the Company. STS-IV have a profit rate of 6M KIBOR + 15 bps per annum.

The assigned ratings are underpinned by medium business risk profile of the telecom sector owing to the non-cyclical nature of the industry with 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.

The assigned ratings also reflect PTCL's strategic market position as the country’s leading Integrated Information Communication Technology Company, having the largest fixed-line network with over 71% market share. The ratings incorporate the issuer's strong sponsor profile, given that the GoP holds significant shareholding of 62% while Etisalat Group of UAE holds a 26% equity stake with management control. The ratings also consider the financial soundness and management acumen of Etisalat Group; rated AA- and Aa3 by S&P and Moody's, respectively.

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

For further information on this ratings announcement, please contact 021-35311861-64 or email at info@vis.com.pk.








Rating the Issue
https://docs.vis.com.pk/docs/Rating-the-Issue-Aug-2023
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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