The Pakistan Credit Rating Agency Limited
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Raniya Tanawar

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PACRA Maintains Entity Ratings of Nayatel (Private) Limited

Rating Type Entity
(04-Sep-21 )
(04-Sep-20 )
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 lasting emphasis on customer services. In a technology driven environment, reliable connectivity and quality assurance construes pivotal for customer retention. Nayatel provides connectivity to its customers 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 the passage of time entity has built sound footing and reputable name in its respective niche. The ratings take comfort from various strategic initiatives taken by the management with a vision to achieve sustainable growth in the longer horizon. In the times of pandemic, corporate customers faced a downturn which was countered through increased number of home installations and introduction of FTTT (Fiber to the Tower) services. Since massive usage of 4G services has reduced the connectivity which is being 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 extended its footprint in Faisalabad and Peshawar while also marking its presence in Gujranwala & Sialkot. Collaboration with Universal Service Fund – USF is another step towards gauging entity’s aim in attaining geographical penetration within South Punjab side of the country, precisely. The customer base reflects a good mix, providing advantage in terms of pricing, margin and capacity utilization. The entity's revenue from Faisalabad region is growing at a steady pace, followed by Peshawar - where it commenced business in 2HCY18 - is now closer to achieve breakeven in 2022 as a result of exhibited improvement in EBITDA. 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 strong. 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. The future impact and outcome of expansion/ partnerships remain imperative.

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.