NAYATEL (Micro Net Broadband)

On the New Year eve of 2008, 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

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(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 (a Warid subsidiary), Link dot net (an
Orascom subsidiary), PTCL Smart and World Call.

What is FTTU?

Fiber-to-the-User is 21st century architecture for delivering multiple services

(Voice, Video and Data) to the customer premises. FTTU removes the service
bottlenecks of Last Mile and First Mile challenges. This technology involves
laying down fiber optic cable from the carrier's facilities to the customer premises.
With the ever-decreasing price of Fiber Optic and the rising cost of copper, use of
copper cables worldwide is on the decrease. Fiber Optic cables have near-
unlimited capacity for carrying data at speeds not supported by Copper media.

The Metro Ethernet services provided by NTL are based on Cisco Systems
platform, an optimized, carrier grade switching infrastructure designed specifically
to support advanced services over a fiber optic infrastructure. The data center is
equipped with Cisco routers and high end Sun and Dell Servers. Their core
switches provide high capacity core functions as well as provide sub-second
recovery from many potential network outage events. NTL has deployed Access
and NGN platforms from Alcatel and world's best video head-end from Scientific
Atlanta to ensure quality and performance requirements of their customers. The
passive optical equipment is supplied by world leaders of component
manufacturing, i.e., ADC and Corning (exhibit-3).

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Other services

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 (see exhibit-4)

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.

Broadband internet user’s profile

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. Asian statistics recorded 17,500,000
Internet users as of Mar 08, 10.4%penetration, per ITU (Information technology
unit). 128,700 broadband subscribers as of Mar.31/08, per ITU (exhibit-5).

Marketing and Sales Department

Mr. Wajid Hussain headed the marketing/Sales department as the Manager

sales/marketing. He had a total of 25 personnel under him, from which 20 were
from the sales and 5 personnel allocated to the marketing area.

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FFTU in homes

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 (see Exhibit-1) 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 (see Exhibit -2) 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.

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 NAYATEL
EXHIBIT -1
One Time Setup Costs Installment Plan Facility
a. One Time Setup Costs
For Corporate Customers
Installation charges...........................................................................Rs. 6, 000
Connect, Premium and MAN (Metro Network) Packages
(includes 200 ft double fiber drop cable)

For Home Customers

Installation charges...........................................................................Rs.3, 000
Home Package
(includes 100 ft double fiber drop cable)

b. Choice of Hardware
Alcatel Optical Network Terminal (ONT) Price (Rs.)

1 Ethernet, 2POTS,1 RF Video

Software preloaded, with uninterrupted power supply (UPS) 24, 000
(inclusive of GST)

2 Ethernet,2 POTS,1 RF
Software preloaded, with uninterrupted power supply (UPS) 25, 500
(inclusive of GST)
Broadband Router Price (Rs.)
Broadband Router(4 Ethernet Ports) 4, 700
(inclusive of GST)
Broadband Wireless Router(4 Ethernet Ports) 5, 200
(inclusive of GST)

Note: All above prices are inclusive of 16% GST.

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 NAYATEL
EXHIBIT -1 (cont’d…)

Internet: Home Package

Package Traffic Allowed Per Month Monthly Charges
(Upload + Download)
Home
Speed 512 Kbps 6 GB Rs. 1,199/-
Ultimate Plus
Speed 512 Kbps
(Prepaid Package) 8 GB +
Unlimited Downloads*
(8:00pm to 8:00am & Sundays) Rs. 1,399/-
*Please note unlimited download Home package is available with dynamic IP only.

Note: Rs 31 per additional 100 MB

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 NAYATEL
EXHIBIT -2
Survey Information

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Approximate population per 75,000
square Mile

Rs. 999/256 kbps, 1Gb

Monthly Subscription Rates of upload/download data in one month
Cable or DSL per household

Existing trend towards online On average, people who are connected,

resources (how much time spend 30 to 60 minutes every day on
people spend online everyday. Internet

Security Of Online Resources, Both

do the data companies use 64
bit or 128 bit for cryptography

Data lines damaged by harsh Outside plant copper network of PTCL

weather conditions or blown up in Islamabad is relatively in good shape
by unknown factors as compared to other cities. This entire
network is underground.

The labor cost per hour or per Salary of a telecom engineer with 1 – 2
day for telecom engineers and years experience in data networking is
other people involve. around Rs. 25 - 35 K per month.

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 NAYATEL
EXHIBIT -3

Fiber networks clearly outweigh all other broadband options in performance, security, and scalability.

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 NAYATEL
EXHIBIT -4

Coverage area

• Islamabad Sectors covered.

o F5, F6, F7, F8, F10, F11

o E7, E8, E9
o G5, G6, G9/4 (I&T)
o H8, H9, H10, H11
o I8, I9, I10 (Commercial/Industrial), I11.
o Complete Blue Area
o Faizabad (Muree Road) till Serena hotel and its surroundings
Diplomatic Enclave
o Chak Shehzad, (Orchids and Tarlayi Scheme) Farm Houses
only
o Rawalpindi Cantt (For Corporate customer only)
o Muree Road (6th Road)

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 NAYATEL
EXHIBIT -5

Year Internet users Percent Change

2003 1,200,000

2004 1,500,000 25.00 %

2005 1,500,000 0.00 %

2006 10,500,000 600.00 %

2007 10,500,000 0.00 %

2008 12,000,000 14.29 %

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