Etisalat was in Buyout Talks with Nayatel/Micronet

Etisalat was in takeover talks with Nayatel, a local internet service provider based in Islamabad/Rawalpindi, reported Reuters.

Nayatel confirmed ProPakistani that Etisalat was indeed in talks with Nayatel for buyout of its DSL/Fiber-optic operations. However, talks remained inconclusive and are over now due to price differences from both the sides.

Local internet service provider companies are facing tough competition from PTCL, probably a reason that Micronet had to close its broadband operations for at least 3 exchanges in Islamabad recently.

When asked by ProPakistani about possible merger with any other ISP in Pakistan, company said that it won’t merge/sell its operations with any local operator. However, it might consider a foreign but potentially strong investor.

Nayatel is hoping to expand its domestic business beyond Islamabad and Rawalpindi to Lahore and Pakistan’s biggest city, Karachi, which has an estimated population of 18 million.

Earlier, quoting Mr. Rashid Khan, the chairman of Nayatel, Reuters had reported that Etisalat wanted to buyout DSL and fiber-optic internet operations of Nayatel.

According to Reuters, annual sales among its 7,000 customers top $12 million, said Khan, with revenue growth of 40-50 percent a year.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK

  • I recommend not selling at all especially to foreign company instead improve and become number 1 with maybe hopes of buying PTCL at some point.

  • 7000 customers and $12M that is an ARPU of $1714?
    There is something wrong with these numbers. Even if half this revenue is from high value customers such as govt, telcos embassies in Islamabad, the revenue figures are too high and probably exaggerated.

    Like I said in an earlier post, 7000 is a paltry number and seems like their business is localized to Islamabad. Therefore they probably need to expand into other cities where they will probably face competition from local players (such as Nexlinx in Lahore) and more national players such as Multinet, Wateen, Cybernet, Mobilink and PTCL in other cities.

    This looks more like a publicity stunt to have Etisalat-PTCL raise its offer or gain foreign investor interest. Unfortunately with the state Pakistan is in and explained by Mr Khan (the govt has failed on all fronts)I don’t know if anyone has an interest to invest further in Pakistan.

    It seems to me that the recent news of PTCL entering the GPON space and news of other companies joining the FTTH race is having its effect on Nayatel. They are now looking for a sugar daddy from China, Norway or the Arab world.

    • @MFB

      No wonder you are best on advocating against NAYAtel:-)

      Your are right that 7000 customers is a paltry number but consider most of them to be corporates depending on Nayatel for their operations in twin cities, especially Islamabad. Even 2000 corporates could make huge figures for handsome returns. Take a sample of MNCs, Embassies, Semi Govt Offices and other big businesses and you will find 90% of them connected to Nayatel.

      Also, as for competition, Nayatel / Micronet has been facing the challenge since 2002 when they offered 1st DSL connection and in 2004-05 when they deployed 1st FTTH link in Pakistan and have been giving testing times to big operators like PTCL etc. Not to forget the PTCL has been carrying regionally restricted marketing campaigns and package upgrades in Rwp/Isb only to tackle Nayatel. To add, they recently got “INSPIRED” from Nayatel who, when they connect a premises, label the its entrance with a TAG “This premises is fiber connected” and PTCL has started doing the same labeling Islamabad “This area is PTCL Broadband connected”

      As for publicity stunt, if you read the Pro Pakistani news with more clarity, it depicts that Nayatel denies any merger or sellout to Etisalat. The news was quoted by Reuters which actually was nothing more than the offer made to Nayatel one year back, however, those were not conclusive and now there is no discussion on this at topic at all.

      Nayatel is in news after they were being ranked as the fastest growing IT and Telecom Company in Pakistan and second fastest in Pakistan. We are and should be proud that in turmoil times when big companies have laid off their workers in huge numbers, Nayatel has been keeping Pakstan’s FLAG high and continues to prosper as pride of Pakistan. Though they seem not to be hungry for investment like they were not when they started their operations with local resources long back, Insha Allah they will still prosper to grow in Lhr, Fsd and Khi znd but may be a little slow.

      Long live Pakistan

      Long Live NAYAtel

      • I have nothing against Nayatel. Let me clarify that first. They are an excellent company and should be a role model for companies like PTCL – which is now going into FTTH in a big way. I’m sorry that I didn’t mention this before and should have. As an employee of Nayatel, you must have been offended and I’m sorry. Trust me it is not personal. I am an admirer of Nayatel and our office in Islamabad in the ISE uses them as well.

        The numbers mentioned in the article just don’t add up that’s what I’m trying to say. $12M of revenue with 100% corporate customers means $1715 per customer on average. This has to be wrong. That’s all I’m trying to say.

        If you read the comment below of @ Farhan, he says majority of businesses use corporate packages which start from 24,350 PKR. Say 100% of the 7000 customers use corporate packages, at $1715 per customer this means the average has to be 145,775 PKR (@85 PKR per USD) which is 6 times the starting corporate package reported by @ Farhan.

        I think people get what I’m trying to say. Either the revenue is an exaggeration or the number of customers under reported. Propakisanti editors can you comment (since you connected with them)?

        • Sorry maybe I’ve gotten confused here with the annual and monthly rates. The average monthly has to 142.9 USD.

          My office in ISE whom I checked with does say that the average prices in Islamabad for 1 mb services are below 10,000 PKR.

          Anyway if the average rate is 165 USD, as provided by Ahmed Afzal (I’m guessing you work there Ahmed).

        • This is how i would translate this value:

          – USD 12 million: USD 12000000
          – USD 1200000 / 7,000 customers: USD. 1714 per customer per year
          – USD 1714 / 12 months: USD 142 per customer per month

          USD 142: PKR 12,142 per customer per month

  • With the PTCL GPON project head-on, Nayatel finds itself against the wall. If Nayatel does not sell itself (which its management been trying to do failed to do since the last two years) then Nayatel will go down and sold for pennies (like Multinet). This seems to be more of a rumour as the Nayatel management finds itself in a position where PTCL will drive it to extinction.

    • @ Faisal

      I think we should be more positive for Pakistan and our companies and shouldn’t rely on criticism, only.

      • @Optimist: Don’t try to be a Nayatel guy. Read my post. I’m not criticizing Nayatel but only telling about their options.

        You seem to be a Nayatel director :-)

        [Comment Edited]

  • Annual Sales figure is close to the actual figure. Their monthly rev per customer for Nayatel is approx. US$ 165 which comes to US$ 14 million per year. Add one million + for DSL.

  • Average ARPU for DSL or Broadband is not more than 10 to 15 USD in Pakistan. I also dont buy these numbers and I know that Etisalat may be many things but they aren’t stupid. im pretty sure thats why aquistion talks failed in the first place.

    [Comment Edited]

    • Almost all good call centers and every embassy, NGO and other good businesses are using there corporate packages which start from 24,350 PKR ( Unlimited Packages )

      They do have lots of Home Users, but there focus have been always on corporate customers which they have in huge numbers due to the excellent support they provide.

    • They concentrate on corporate connections which is the mainstay of their revenue. And have dominated the Islamabad market.

  • I wouldn’t really want Nayatel to sell out to the Arabs. They have run most of their companies into the ground. I am very happy with the service I am getting from them.

    Even if they have to sell, its better that the company is sold to someone who can run it and build on the success that Nayatel has had.

    On a completely different note, the 15gb home package is getting a little old now. All the service providers are offering 24/7 unlimited packaged. Nayatel needs to follow suit

  • interesting….
    even with so much etisalat involvement in pakistan’s telecom industry can anyone tell me why our latency with UAE has gone from very good to horrible since past few months…. the pings were so good but now they’re terrible :( excuse me for being off topic

  • Some more details on how Nayatel generates its revenues and how its ARPU can be much higher:

    1. There are very few home users (I admit being one of them). Typical home users are CXOs of MNCs, ambassadors, etc. whose upfront charges are paid by their employers. Nayatel’s domestic internet package prices are the same as for PTCL or LDN or Micronet DSL.
    2. My guesstimate is that more than 80% of Nayatel revenue comes from Telcos, Corporates, Banks, etc. These organizations run their business “Intranets” over Nayatel fiber.
    3. The advantage of using Nayatel network for such organization is that they offer Ethernet interface to the end user (unlike most providers in the past where TDM interfaces were offered). Cost of ethernet interface in end user equipment is also cheaper than TDM interfaces so the end user ends up saving money. Another advantage is that if you have an ethernet interface, you can upgrade your Internet or Intranet bandwidth instantly. In case of TDM you have to upgrade the physical interfaces (E1 to E3 to STM1 and so on). Nayatel is now offering Giga-bit interface as well.
    4. Another large customer segment is the dark fiber users (Telcos, Govt organizations, etc). I this segment contracts can be on IRU basis or 10 to 20 year lease basis. The HEC’s PERN-2 network in Rwp/Isd is one such example.
    5. Finally, there is revenue from corporate “Internet” services. The important thing to remember in this segment is that tariff is decided not on the basis of bandwidth or volume but on the basis of SLA. Here Nayatel also has an edge over its competitors as it can offer better SLA’s due to its buried fiber. I think almost everyone in this forum (including MFB) acknowledges the quality of Nayatel support and service. :-)

  • We not need to sell Pakistani companies like we sold out PTCL a Profitable organization.

    We need to sell PIA & Railway which are loss. Why we sold out PTCL in few bugs & still UAE guys are not paying!!!

    We need to think jointly taking back PTCL instead of selling Nayatel.

    Good Luck Naya Tel.

  • We not need to sell Pakistani companies like we sold out PTCL a Profitable organization.

    We need to sell PIA & Railway which are loss. Why we sold out PTCL in few bugs & still UAE guys are not paying!!!

    We need to think jointly taking back PTCL instead of selling Nayatel.

    Good Luck Naya Tel.

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