PACRA Maintains Entity Ratings of Nayatel (Private) Limited

Nayatel Private Limited’s (The Company) ratings reflect a strong business profile and sturdy presence in the telecommunication industry of Pakistan. The company specializes in triple-play services (telephony, cable TV, and data). The stability of Nayatel 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 construe pivotal for customer retention. Nayatel provides connectivity to its customers through scalable and cutting-edge technology, i.e., FTTH (fiber to the home) and FTTT (fiber to the tower). 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 a sound footing and a 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. Nayatel is customer-centric, it has a competitive edge in its customer service and value-added services. Stiff competition exists in the FTTH market segment where strength is primarily derived from owned and self-laid length of fiber optic cable networks. Pakistan Telecommunication Authority (PTA) latest data related to FTTH segment releveled that, Nayatel holds a prominent position in terms of active subscribers with a sizeable market share. The company has a strong presence in Islamabad / Rawalpindi, and continuously adding up new surrounding areas such as DHA, Bahria town, and Wah Cantt. Following Islamabad / Rawalpindi, Faisalabad and Peshawar are major revenue contributors. Recently Nayatel has also started operations in Gujranwala, Sargodha, Sialkot, Sheikhupura, Bahawalpur, Sahiwal, Lahore, and Multan. FTTT is now a growing segment, and moving ahead, the company anticipates substantial revenue contribution from this segment as well. During 6MFY23, the topline clocked in at ~PKR 3,758mln, reflecting a growth of ~16.4% which can be attributed to the acquisition of new customers and the implementation better pricing strategy. The customer base reflects a mix of corporate and home, providing an advantage in terms of pricing, margin, and capacity utilization. The company has instigated a sound internal control system across the organization which is accompanied by IT, business insight & intelligence, and financial reporting solutions. The financial risk profile is considered adequate with comfortable cashflows, coverages, and working capital management. Capital structure is leveraged, encompassed by long-term borrowings for CAPEX and expansion. The governance of the company is considered good while the addition of an independent oversight can further strengthen it. 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 resources and performance-driven culture.
The ratings are dependent upon improvements in revenue and profitability while retaining sufficient cashflows and coverages. However, adherence to maintaining its debt matrices at an adequate level is a prerequisite.

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 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.