The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Assigns Initial Entity Ratings to Nayatel (Pvt) Limited

Rating Type Entity
(07-Sep-18 )
Action Initial
Long Term A
Short Term A1
Outlook Stable
Rating Watch -

The strength of Nayatel's business model is in its robust technology infrastructure with an enduring emphasis on customer services. Reliable connectivity and quality is pivotal to all customers. Nayatel provides connectivity to its customer through scalable and cutting edge technology, i.e., FTTH (fiber to the home). An Optical fiber as a medium is superior to the other alternatives to provide ultra-broadband, high definition cable TV and allied services. With better customer experience, sustainability and growth, Nayatel has made corporate and home market of Islamabad and Rawalpindi its strong forte, wherein it captures the bulk of the market. The customer base reflects a very good mix, providing advantages in terms of pricing, margin and capacity utilization. The volumes are growing, so are the profits. The company has embarked upon an expansionary strategy. Faisalabad is the second market, wherein the company is approaching break-even soon. Peshawar is building-up. Competition from other players is adequate, given the sheer amount of entry cost. Future expansion plans reflect penetration into bigger cities over a longer horizon with augmented equity base. The company has raised leveraging to fund its expansions. The current and foreseeable cash flows are expected to meet the upcoming obligations. The governance of the company is considered strong with an inherent strength emerging from its ownership structure.
The company has talented and motivated management team. The top executives are closely connective hence team cohesiveness is an advantage. The overall pool of management reflects quality human resource and performance driven culture, which is considered a pre-requisite in this business.

The ratings are dependent upon the sustained risk profile of the company. This presupposes sustained technological and HR advantages of the company, which Nayatel is carrying at the moment. The financial discipline is also considered essential, going forward.

About the Entity
Nayatel (pvt.) Ltd, established in 2004, was the first triple play company in Pakistan. The company was first one to provide FTTH (Fibre to the home) service not just in Pakistan but also in South Asia in September 2006. Mr. Wahaj us Siraj, is the CEO of Nayatel possessing an experience of over two decades in the broadband industry The other two founders i) Mr. Aqeel Khurshid and ii) Mr. Saad Saleem holds the position of CTO and COO respectively.
Nayatel is owned by Micronet broadband (Pvt.) Limited (MBL). MBL’s ownership comprises of 3 groups of investors; MBL’s original shareholders, Mr. Rashid Khan and Mr. Ashraf Qazi. The BoD comprises 6 directors, 3 EDs and 3NEDs.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.