The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Maintains Entity Ratings of Nayatel (Private) Limited

Rating Type Entity
(02-Sep-22 )
(04-Sep-21 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

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). 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 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. As of today, Nayatel has successfully laid off an optical fiber network footprint of 231,236 KM. The service period is also a prerequisite for geographical penetration in the market which results in capturing market share. The company has a strong presence in Islamabad / Rawalpindi followed by Faisalabad, and Peshawar. Currently, Nayatel has set its footprint and started operations in Gujranwala, Sargodha, and Multan. The top line of the company is growing steadily over the years whereas margins and profitability have also improved. The customer base reflects a good mix of corporate and individual customers, providing an advantage in terms of pricing, margin, and capacity utilization. The company has instigated a robust internal control system across the organization which is accompanied by sterling IT, business insight & intelligence, and financial reporting solutions. 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 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 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 and improvement in size 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.

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.