Karachi, October 05, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned initial ratings of ‘A-/A-2’ (Single A Minus/ A-Two) to Tower Power (Pvt.) Limited. Outlook on the assigned ratings is ‘Stable’. The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are sound, while risk factors are small.
Incorporated in November 2019, Tower Power (Private) Limited (TPL) is a wholly owned subsidiary of Associated Technologies (Private) Limited (ATL). Considering the growth potential of its Tower Co business, ATL decided to separate this business unit to ensure dedicated professional team, separate resources and books of accounts. As part of the arrangement, relevant assets and liabilities shall be transferred to the books of Tower Power (Pvt.) Limited under the Business Transfer Agreement signed in September 2022. Assigned ratings take into account sufficient experience and expertise of parent organization, a sustainable revenue model, and are underpinned by the successful transfer of all assets as mentioned in the agreement schedule.
The overall business risk profile of the industry is considered low given extensive lock-in periods, limited scope for termination, and an escalation clause that is part of the signed agreement with Mobile Network Operators. Furthermore, industry’s demand outlook is positive, given rising demand of towers driven by mounting mobile data usage and sizeable potential for coverage and capacity expansion. Tenancy ratio is a key growth driver in Tower Co business, which remains on the lower side in Pakistan, indicative of room for growth. TPL’s competitive advantage stems from backward integration with parent company-ATL and consistent availability of energy for their towers at all times due to utilization of solar power at more than 90% of the sites. However, complexity of the business environment and increasing competitive intensity in the industry remains key business risk factors.
Assigned ratings also take into account projected financial risk profile of the Company. While leverage indicators are expected to increase in line with the business expansion plans, equity support through injection or profit retention will remain important for maintaining capitalization levels within parameters for the assigned ratings. The ratings are sensitive to planned completion of transfer process and maintenance of projected revenue and leverage levels.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/