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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Sep-20

Analyst
Bazah Tul Qamar
bazahtul.qamar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Nayatel (Private) Limited

Rating Type Entity
Current
(04-Sep-20)
Previous
(05-Sep-19)
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The stability of Nayatel's hinges on its strong business model, robust technology infrastructure and 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, During the period corporate customer's downturn due to impact of pandemic was mostly mitigated through increased number of home installations and introduction of FTTT ( Fiber to the Tower ) services to telecommunication companies. Since, massive usage of 4G services, has reduced the connectivity which is being counter balanced by fiber to the Tower (FTTT) solution. Nayatel has made corporate and home market of Islamabad and Rawalpindi its strong forte, wherein it captures the bulk of the market. Moreover, it has expanded its presence in Faisalabad and Peshawar along with a planned expansion in Gujranwala and Sialkot. The customer base reflects a very good mix, providing advantages in terms of pricing, margin and capacity utilization. The company's revenue from Faisalabad region is growing at a steady pace. It has commenced operations in Peshawar since 2HCY18 wherein the company is still struggling with negetive EBITDA. which is expected to achieve breakeven in 2022. Growth plans reflect low niche penetration strategy into smaller 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. However, in the current interest rate environment, coverages are adequate. The governance of the company is considered strong with an inherent strength emerging from its diverse ownership structure. The company has a 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, technological and HR advantages of the company, which Nayatel is carrying at the moment. Financial discipline is also considered essential.

About the Entity
Nayatel (Private) Limited, established in 2004, was the first triple play company in Pakistan. 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 Ali Khan and Mr. Ashraf Qazi. The Board of Directors comprises 6 directors, including 3 non-executive directors.

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.