Shams ul Nisa

The Air Link Communication Limited (AIRLINK) has reported a significant decline in sales volume for the Fiscal Year 2025 due to the tax regulations on the import and sale of mobile devices, reports WealthPK.

The new tax structures have increased the prices and decreased the consumer demand. The Federal Board of Revenue (FBR) has introduced a 25% sales tax on imported mobile phones. Incorporated in 2014, the AIRLINK is a public limited company that imports, exports, distributes, indents, wholesales, and retails communication and IT-related products and services, including mobile phones, smartphones, tablets, laptops, accessories, and related items. The tax policy has increased the cost of mobile phones, making it impossible for many consumers to purchase new versions of mobile phones, thus slowing down their purchasing decisions.

On top of that, the rising inflation has pushed people to delay or even cancel plans for upgrading their devices during the review period, which has contributed to the AIRLINK’s drop in sales. In the first quarter of the Fiscal Year 2025, the AIRLINK reported a decline in standalone sales to Rs13.14 billion from Rs14.11 billion in 1QFY24, reflecting the growing financial pressure on the consumers due to the higher costs of imported and locally assembled mobile phones. Additionally, the company reported a gross profit margin of 7.83% in 1QFY24 compared to 8.45% in 1QFY25.

According to the financial results on the Pakistan Stock Exchange (PSX), the earnings per share dropped to Rs0.89 in 1QFY25 from Rs1.65 in the same period last year, reflecting the impact of the reduced sales volumes on the overall performance of Pakistan's leading tech company. Furthermore, the consolidated sales slipped to Rs22.052 billion during the review period. However, the consolidated gross profit increased to Rs2.170 billion in 1QFY25 from Rs1.6 billion in 1QFY24. Likewise, the consolidated net profit grew to Rs842.1 billion in 1QFY25, and the earnings per share stood at Rs2.13 compared to Rs2.06 in the same quarter last year. Despite the challenges, the AIRLINK remains determined to boost sales and overall performance with inflation declining to single digit.

Therefore, the company is confident of achieving key objectives, including improving the financial performance, expanding market presence, driving product innovation, and advancing sustainability efforts. Looking forward, the management is continuously striving for efficient operations, ensuring product quality, achieving production targets, and meeting the company's goals with continuous support from its stakeholders. However, the telecom companies are grappling with similar challenges due to the tax reforms. As a result, experts emphasized the need for collective advocacy to reform the tax policies that may be hampering growth in Pakistan’s technology and communications sectors.

Credit: INP-WealthPk