Pakistan Mobile Communications Limited (“PMCL”) is seeking to expand its network into currently underserved rural areas thereby enabling access to telecommunication services for a wider proportion of the population. To fund this capital expenditure PMCL decided to issue a local currency Islamic bond, known as a Sukuk, of up to Pakistan Rupees (“PKR”) 8 billion (USD 75 million). Given the limited size of the corporate bond market in Pakistan PMCL was constrained by existing investors having reached their regulatory limits either in terms of exposure to PMCL or the telecommunications sector.
GuarantCo helped existing investors overcome their regulatory limits and also, by improving PMCL’s local credit rating from AA- to AAA enabled conservative new Islamic investors to invest. The Sukuk was structured as a “Service Ijara”, the first time this structure has been used in Pakistan, thus helping build new products and capacity in the local capital markets. Such innovations are an important element of GuarantCo’s mission as it works to open up domestic markets to support essential infrastructure finance.
PMCL’s expansion into currently underserved rural areas helps democratise an important driver of economic growth and inclusion. Pakistan’s mobile phone sector is highly competitive with very low tariffs – leaving operators often reluctant to invest in new capacity. As Pakistan’s leading mobile phone operator, PMCL is best placed to bear the considerable capital costs involved with rural expansion.
GuarantCo, together with the PIDG Technical Assistance Facility, is currently evaluating an existing PMCL scheme to provide remote text based educational support to women and girls with a view to funding further roll out in the most inaccessible regions of NW Pakistan.