Karachi: In a recent announcement, VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Telecom Mobile Limited at 'AA-/A1', maintaining a stable outlook. The ratings reflect the company's strong credit quality and the likelihood of timely repayment of short-term obligations, despite varying economic conditions.

According to a statement by VIS Credit Rating Company Limited, the previous rating action was announced in November 2023. The company operates under the brand name 'Ufone' and is a wholly owned subsidiary of Pakistan Telecommunication Company Limited. PTML has demonstrated a robust profile supported by its parent company, a state-owned entity with significant shareholding by the Government of Pakistan and e and Group. The e and Group also maintain high credit ratings from global agencies.

The reaffirmed ratings are bolstered by PTML’s improved topline and gross margins, driven by increased demand for data and voice services. However, the company's financial risk profile remains challenged due to its leveraged capital structure, affecting profitability.

A potential merger with Telenor is on the horizon, which could enhance PTML's market share and operational efficiency. The merger, coupled with the ongoing support from its parent company, is crucial for maintaining the current ratings.