CASE STUDY

NAYATEL (Micro Net Broadband)

On the New Year, Mr. Wajid Hussain, Manager Sales and marketing was sitting in his lavish
office looking at the dusk of the last year. He was thinking about what his company has achieved
over the years. Where it was, with having 15 customers and now, how far it has come by having
3600+ customers. But he still looked unsatisfied, because when he joined this company, he had a
vision to make this company best amongst all in the market. He turns to his cup of coffee, picks
it up and takes a sip and thinks of what he has do to make this company great. Just then it strikes
him about the new concern of how to increase sales of FTTU facility of NayaTel with having a
low marketing budget and yet another was how to attract home internet users. Wajid had to come
up with quick strategies which would be effective to cater these.

Company Background

NayaTel (Pvt.) Ltd. (NTL) is a sister concern of Micronet Broadband (Pvt) Ltd. (MBL), the
premier and leading DSL broadband service provider in Islamabad and Rawalpindi. Leveraging
its rich expertise and experience of broadband, MBL team conceived the idea of a most modern
telecom network which can take care of ever growing telecommunication needs of customers
and have the capability to cater for telecommunication requirements of at least next three
decades. The idea was transformed into reality when NTL launched South Asia's first Fiber to
the Home (FTTH) or simply Fiber to the User (FTTU) network in Islamabad in September 2006.
Nayatel are the pioneers in bringing fiber optics communication services to Pakistan and in this
industry in 2006 they are facing no competition and even in DSL industry in 2002 they were the
early entrants, hence enjoying more or less no competition and high profit margins at that time,
now some of direct and indirect competitors includes Wateen telecom, Link dot net, PTCL Smart
and World Call.

(FTTU) Fiber-to-the-User is 21st century architecture for delivering multiple services (Voice,
Video and Data) to the customer premises.

Nayatel weaves all three bands of service (Telephone, Cable TV, and Broadband Internet) on one
network in the form of Nayatel's “Triple-Play” Services with a single bill for customers. They
cover almost 90% area in Islamabad and most of commercial area of Rawalpindi Its fiber optic
technology allows business to meet increased data demands, without investing additional money
and resources for hardware and software.The benefits of Metro Ethernet not only include
multiple converged services over a single high-performance connection; it also means that these
services are delivered over a single protocol (IP/Ethernet) from Nayatel's office to the desktop.
Nayatel backs its fiber-optic infrastructure with Mean-Time-To-Restore (MTTR) commitments
in case fiber is cut or damaged.

SWOT Analysis

Strengths

Related Business: NAYATEL is already into telecom business and has developed managerial
and technical capabilities.

Innovation: Broadband is an innovative addition to the service as far as Pakistani market is

concerned. It is in line with the policy of the company to tap the markets where consumers’
needs are not being addressed.

Brand equity: The Company has an established brand name..

Extensive distribution channels: NAYATEL has extensive distribution channels for the
distribution of its new service.

Market oriented: Company’s comparative advantage lies in already accumulated knowledge,

experience and data in the field.

Financial muscle: NAYATEL has sufficient resources to invest in the new project.

Weaknesses

Unpredictable market: Pakistani market is very unstable.

Unskilled workforce: Specialized training is required for workforce and management to cope
with new challenges emerging from the introduction of the new service.

No existing alliances: The company is making alliances with certain new suppliers for the
equipment etc. which, at present it does not have.

Low initial returns: return on investment are initially low..

High turnover rates: The Company has not been able to retain good employees for long term. It
would also hamper the ability of the company to handle the launch of new service successfully if
the turnover rate does not come down.

Opportunities
Expasion: The biggest opportunity in Pakistani market is that there are certain areas where the
services of competitors can not reach. In those areas there are sufficient people who need the
services the company plans to offer. So, there are sufficient unmet needs in the market which can
be catered through the service.

Growth in the market: The market for information technology / broadband service is growing
with the growth of middle income segment in Pakistan. These customers are increasingly
demanding better services.

Threats

Short product life cycle: The Company would have to continually innovate given the nature of
the industry. Fast pace of technological developments might render the service obsolete in few
years and it might be replaced by more advanced technology.

Downturn in economy: The down turn in Pakistani economy might have impact on disposable
income of the population which might not be inclined to spend much on the entertainment
activities. General well being of economy always has favorable impact on all the businesses.

Little potential differentiation: It is expected that other competitors would enter the market. It
might start price war between NAYATEL and potential competitors. In that case there would be
very less differentiation NAYATEL would be able to offer given the nature of the service.

Increased bargaining power of suppliers: The Company would need vital alliances with suppliers
and other partners. They might be suppliers of the competitors. Suppliers’ bargaining power
might increase in that case making input costs high and leaving the company in difficult position.

Uncertain demand: It is very difficult to estimate the exact demand for the service. There might
be variation which could result in losses for the company.

Employee retention: NAYATEL might lose its key personnel to other competitors.

Broadband Market for NAYATEL

Pakistan is a country of 17million people with literacy rate of 49.9%. Islamabad is a capital city
(where currently Nayatel is providing services along with twin city Rawalpindi) with a
population of approximately 901,137 the literacy rate is highest in this city as there are 904
recognized institutions in Islamabad along with number of national and multinational offices.

Main issues

FTTU is the best service available with state of the art technology, but as it costs a bit more than
any other service available makes it difficult to penetrate in to homes. There have been great
packages introduced to make the payments easier, but in spite of all these flexibilities, home
users were still not coming. The main focus when company was set was on corporate customers
which give them good profits and they have achieved it but now they want to magnetize home
users.Mr. Wajid was facing a Low marketing budget to play around with, which meant that all
activities had to be chosen to its best. As there was low budget most of the activities had to be
sacrificed but still he had to grasp good market chunk and to come up with strategies bold
enough to achieve this target.If Wajid wanted to penetrate into the home market, and attract
home internet users, he had to design a perfect strategy which would not cost the company too
much expense in the marketing area. And he had to come up with something real fast, if he wants
to keep the name of Nayatel in the lead from the competitors. He had to take this decision within
limited resources and in no time.