PACRA Maintains Entity Ratings of Pakistan Mobile Communications Limited

Lahore, June 29, 2020 (PPI-OT): The ratings incorporate the robust business profile of the company, represented by its leading market share of ~36% with ~60 million cellular subscribers as at Dec’19 and formidable sponsor support. Optimizing on its exclusive brand “Jazz”, the company commands solid volumes and strong margins. Additionally, the company is pursuing digitalization as a long-term strategy and vision. Overall market dimensions remained positive in CY19 with respect to mobile data services, as penetration level in 3G/4G subscribers stood at ~35% as at Dec’19. Despite re-imposition of tax on mobile services (May’19 onwards), revenue recorded a sanguine growth in CY19.

The recent outbreak of global pandemic, Covid-19, has impacted all economic sectors of the country at different levels. After initial minor impact, Telecom sector, is back on growth track with data leading the way. The company’s financial risk profile exhibits a strong outlook demonstrated by eased working capital strategies, comfortable coverages and moderate leveraging (Dec’19). Notable CAPEX is incurred by the company on a periodic and need basis, owing to the nature of the business.

Debt profile majorly comprises long term borrowings, including foreign currency exposure. The partial payment for renewal of 2G license USD~270mln under protest till June 2020 (total payment demand by PTA is USD~450mln) necessitated additional external capital dependence. Total on-balance sheet debt level, however, continued to align with the previous trend, as some portion of the previous debt book retired in CY19.

The ratings are dependent upon the sustenance of robust revenue growth and profitability. Positive outlook captures the leading market position of the company and its strong performance indicators. As capital structure becomes leveraged, maintenance of sound financial discipline is imperative to uphold the positive outlook.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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