INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE RISK FACTORS GIVEN AT
PARA 4.22, BEFORE MAKING ANY INVESTMENT DECISION.
SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS’ MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES
AND EXCHANGE ORDINANCE, 1969.
PROSPECTUS
Present Issue consist of 110,000,000 ordinary shares of PKR 10 each (20.85% of the
enhanced paid up capital of PKR 5,274,746,200) with a Greenshoe option of up to
additional 90,000,000 ordinary shares (14.58% of the enhanced paid up capital of
PKR 6,174,746,200) in case of over-subscription at an Issue price of PKR 10/- per
share to general public
Subscription list will open at the commencement of banking hours on 20
thApril,
2010 and will close on 21
stApril, 2010 at the close of banking hours
Advisor & Arranger
Joint Advisor & Arranger
Underwritten by:
National Bank of Pakistan Atlas Bank Limited
Arif Habib Limited Habib Bank Limited
MCB Bank Limited Bank of Khyber
Askari Bank Limited Allied Bank Limited
KASB Bank Limited Pak Oman Investment Co. Limited
Arif Habib Bank Limited Faysal Bank Limited
Pearl Securities Limited Wincom (Pvt.) Limited
The date of publication of this Prospectus is 08 April, 2010
Ordinary Shares of Wateen Telecom Limited
GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS
DG Abu Dhabi Group NG Next Generation
ADM Add Drop Multiplexer NGN Next Generation Network
AHL Arif Habib Limited NEPL National Engineers Private Limited
AP Access Point NMS Network Management System
ASON Automatically Switched Optical Network
NOC Network Operations Centre ATM Asynchronous Transfer Mode NTR 1 Northern Telecom Region 1
BW Bandwidth NTR 2 Northern Telecom Region 2
CAPEX Capital Expenditure OEM Original Equipment Manufacturer
CATV Community Access Television / Cable Television
OFC Optic Fiber Cable
CCTV Closed Circuit Television O&M Operations and Maintenance C & C Credit and Collection OPEX Operational Expenditure
CDC Central Depository Company PKR Pakistan Rupee
CNBC Consumer News and Business Channel
PTA Pakistan Telecommunications Authority
CRM NG Customer Relationship Management Next Generation
PTCL Pakistan Telecommunications Company Limited
CPE Customer Premises Equipment PDH Plesiochronous Digital Hierarchy
CPS Carrier-pre-select PLC Private Leased Circuit
CTR Central Telecom Region PBX Private Branch Exchange
CTI Computer Telephone Integration PRI Primary Rate Interface DID Direct inward Dialing POTS Plain Old Telephone Service
DHA Defence Housing Authority PSTN Public Switching Telephone Network
DOD Direct Outward Dialing POS Point of Sale
DSNG Digital Satellite News Gathering PC Personal Computers
DTH Direct to Home PRS Premium Rate Service
DVB-ASI Digital Video Broadcast-Asynchronous Serial Interface
PPV Pay Per View DVB-RCS Digital Video Broadcasting - Return
Channel via Satellite
PS Professional Services EDN Enterprise Data Network QOSs Quality of Services EDGE Enhanced Data rates for GSM
Evolution
RBO Re-broadcasting
E-Fax Electronic Fax RF Radio Frequency
EPG Electronic Program Guide RFI Ready for Installation ESCON Enterprise Systems Connection ROI Return on investment
Etc Etcetera RTR Rawalpindi Telecom Region
EVDO Evolution Data Optimized SAN Storage Area Network
FC/FICON Fiber Channel / Fiber Connection, SDH Synchronous Digital Hierarchy FCR First call Resolution SECP Securities and Exchange Commission
of Pakistan
FCY Foreign Currency SDS Sales Delivery and Service
FTTx Fiber To The ‘x’ (‘x’ can be home, curb, building etc.)
SIP Session Initiation Protocol FWO Frontier Works Organization SLA Service Level Agreement
Gbps Gigabit per second SME Small Medium Enterprises
GDP Gross Domestic Product SMEDA Small and Medium Enterprises Development Authority
GHz Gigahertz SMSC Short Message Service Center
GPRS General Packet Radio Service SMTP Simple Mail Transfer Protocol GPON Gigabit capable Passive Optical
Network
SoHo Small Office Home Office GSM Global System for Mobile
communications
STM Synchronous Transport Module GTR Gujranwala Telecom Region STR-1 Southern Telecom Region 1
HFC Hybrid Fiber Coaxial STR- V Southern Telecom Region V
HP House Passes UAE United Arab Emirates
HSDPA High-Speed Downlink Packet Access
UAN Universal Access Numbers
HTR Hazara Telecom Region UK United Kingdom
IP Internet Protocol USD United States Dollar
IPO Initial Public Offering USP Unique Selling Proposition IPLC International Private Leased Circuit VoD Video On Demand ISP Internet Service Providers VAR Value Added Reselling ISM Industrial, Scientific and Medical VOIP Voice over Internet Protocol
ITR Islamabad Telecom Region VDV Voice Data Video
IVR Interactive Voice Response VPN Virtual Private Network
KB Kilobyte VSAT Very Small Aperture Terminal
KPI Key Performance Indicator VAS Value Added Services
KSE Karachi Stock Exchange WAN Wide Area Network
KTR Karachi Telecom Region WDM Wavelength-Division Multiplexing
LCY Local Currency WiMAX Worldwide Interoperability for
Microwave Access
LL Local Loop WLL Wireless Local Loop
LTE Long Term Evolution WOG Wateen Online Gaming
LTR Lahore Telecom Region WTI Warid Telecom International
MAN Metropolitan Area Network WTR Western Telecom Region
MHZ Megahertz WMM Wateen Multi media
MB Megabyte
MW Micro wave
MPLS Multiprotocol Label Switching MTR Multan Telecom Region
TABLE OF CONTENTS
1 APPROVALS AND LISTING AT THE STOCK EXCHANGE ... 4
2 SHARE CAPITAL AND RELATED MATTERS ... 6
3 UNDERWRITING, COMMISSIONS, BROKERAGE, AND OTHER EXPENSES ... 12
4 THE COMPANY ... 14
5 FINANCIAL INFORMATION ... 78
6 MANAGEMENT AND RELATED MATTERS ... 93
7 MISCELLANEOUS ...104
8 APPLICATION AND ALOTMENT INSTRUCTIONS... 111
9 SIGNATORIES TO THE PROSPECTUS ... 114
10 MEMORANDUM OF ASSOCIATION ... 115
PART 1
1 APPROVALS AND LISTING AT THE STOCK EXCHANGE
1.1 APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN The approval of the Securities & Exchange Commission of Pakistan (“SECP” or the “Commission”) has been obtained for the issue, circulation, and publication of this Prospectus (the “Prospectus”) as required under section 57(1) of the Companies Ordinance, 1984 (the “Ordinance”).
It must be distinctly understood that in giving this approval, the SECP does not take any responsibility for the financial soundness of the Company and any of its scheme stated herein or for the correctness of any of the statements made or opinions expressed with regard to them. The SECP has not evaluated the quality of the Issue and its approval of the Prospectus should not be construed as any commitment of the same. The public / investors should conduct their own independent investigation and analysis regarding the quality of the Issue before subscribing.
1.2 CLEARANCE OF THE PROSPECTUS BY THE STOCK EXCHANGE
The Prospectus has been cleared by the Karachi Stock Exchange (Guarantee) Limited (“KSE”) and the Lahore Stock Exchange (Guarantee) Limited (“LSE”) jointly referred to as the “Stock Exchange” in accordance with the requirements of its Listing Regulations. While clearing this Prospectus, the Stock Exchange neither guarantees the correctness of the contents of this document nor the viability of Wateen.
The Stock Exchange has not evaluated the quality of the issue and its clearance of the prospectus should not be construed as any commitment in respect of the same. The public / investors should conduct their own independent investigation and analysis regarding the quality of the Issue before subscribing.
1.3 FILING OF THE PROSPECTUS AND OTHER DOCUMENTS WITH THE
REGISTRAR OF COMPANIES
The Company has delivered to the Registrar of Companies, Companies Registration Office (“CRO”), Karachi, as required under section 57(3) and 57(4) of the Ordinance, a copy of the Prospectus signed by all the Directors of the Company, together with the following documents attached hereto:
(a) A letter dated December 10, 2009 from the Auditors of the Company, M/s. A.F. Ferguson & Co., Chartered Accountants, consenting to the publication of their name in the Prospectus, as required under section 55 of the Companies Ordinance, 1984, which contains in Part V certain statements and reports issued by them as experts (which consent has not been withdrawn). (b) Written confirmations of the Auditors, Legal Advisor, and Bankers to the Issue mentioned in
this Prospectus consenting to act in their respective capacities, as required under section 57(5) of the Ordinance.
(c) Copies of material contracts and agreements mentioned in Part 7 of this Prospectus as required under section 57(4) of the Ordinance.
(d) Consent of the Directors and Chief Executive of the Wateen Telecom Limited who have consented to their respective appointments being made and their having been named or described as such Directors and Managing Director / Chief Executive in this Prospectus, as required under Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4) of part 1 of the second schedule of the Ordinance.
1.4 LISTING AT THE STOCK EXCHANGE
An application has been made to the Stock Exchange for permission to deal in and for the quotation of the shares of Wateen.
In accordance with the “Regulations for Future Trading in Provisionally Listed Companies” of the Stock Exchange, the Company shall stand provisionally listed for trading and for the quotation of its shares on the Stock Exchange from the date of publication of this Prospectus, or any other date as may be specified by the Stock Exchange.
If for any reason, the application for formal listing is not accepted by the Stock Exchange, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the application money to the applicants in pursuance of this issue, as required under the provisions of section 72 of the Ordinance.
PART 2
2 SHARE CAPITAL AND RELATED MATTERS
2.1 SHARE CAPITAL
No. of shares (PKR) Total
Authorized Capital
1,000,000,000 Ordinary shares of PKR 10/- each 10,000,000,000
Issued, Subscribed, & Paid up Capital Issued for cash
208,737,310 Ordinary shares of PKR 10/- each 2,087,373,100
Issued for bonus
208,737,310 Ordinary shares of PKR 10/- each 2,087,373,100
417,474,620 Total 4,174,746,200
No. of shares Total
(PKR)
The existing issued, subscribed & paid up capital of the Company is held as follows:
Shareholders of the Company
680,000 H.H. Sheikh Sultan Bin Hamdan 6,800,000
1,000 H.H. Nahayan Mabarak Al Nahayan(Chairman) 10,000
1,000 H.E. Sheikh Saif Bin Muhammad Bin Butti Hamid Al Hamid (Director) 10,000
1,000 Mr. Dhafer Sahmi Jaber Mufreh Al Ahbabi 10,000
1,000 Mr. Ali Salem Al Owais 10,000
900 Mr. Bashir Ahmed Tahir (Director) 9,000
1,000 Mr. Marwan Suleiman Zawaydeh 10,000
100 Mr. Parvez A. Shahid (Director) 1,000
100 Mr. Ahmed Darwish Dagher Al Marar (Director) 1,000
450 Mr. Khalid Manea Saeed Ahmed Al Otaiba(Director) 4,500
450 Mr. Abdulla Khalil Muhammad Samea Al Mutawa (Director) 4,500
Shares held by Sponsors
333,292,700 M/s Warid Telecom International L.L.C. 3,332,927,000
83,494,920 M/s Bank Alfalah Limited 834,949,200
417,474,620 Total 4,174,746,200
No. of shares Total
(PKR)
Present Issue
110,000,000 Shares to be issued to general public (20.85% of the post-IPO paid up capital) at a price of PKR 10/- per share 1,100,000,000
110,000,000 Sub total 1,100,000,000
Notes:
(i) As per Rule 3(I)(iv) of the Companies (Issue of Capital) Rules, 1996, the sponsors shall, at all times, retain at least twenty five per cent (25%) of the paid-up capital of the Company;
(ii) As per Listing Regulation No. 6(A)(7) of the Stock Exchange, sponsors’ shareholding in excess of 25% shall not be saleable for a period of six months from the date of public subscription.
(iii) The shares allotted to investors before the IPO, other than the sponsors, shall not be saleable and transferable for a period of six months from the date of public subscription. The Company will ensure that it will not allow transfer of these shares and have issued necessary instructions to its Share Registrar in this regard;
(iv) In case of oversubscription, the Company shall exercise the Greenshoe option, and Issue up to 90,000,000 additional ordinary shares at PKR 10 to general public.
(v) The Company through its special resolution under Section 208 of the Companies Ordinance, 1984 passed on December 15, 2009 proposed acquisition of 397,027 shares (49%) of the face value of Rs. 100 each from the existing individual shareholder of Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt.) Limited) (“WSPL”) at a price of PKR 1,234.18 each, to make it a wholly owned subsidiary. The existing individual shareholder of WSPL from whom the said 49% shares are being purchased is Mr. Jahangir Ahmad who was employed by the Company from 1 January 2007 to 31 December 2009.
Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/-.
(vi) The members of the Company through special resolution under Section 86(1) of the Companies Ordinance 1984 passed on December 15, 2009 has also permitted the Company to raise a further capital of up to PKR 1.5 billion through an equity line of credit in addition to the PKR 2 billion being raised through this public offering of shares.
2.2 OPENING AND CLOSING OF SUBSCRIPTION LIST
The subscription list will open on 20th April, 2010 at the commencement of banking hours and will close on 21st April, 2010 at the close of banking hours.
2.3 INVESTOR ELIGIBILITY CRITERIA (a) Pakistani citizens residing in Pakistan;
(b) Pakistani citizens residing outside Pakistan;
(c) Persons holding two nationalities including Pakistani nationality; (d) Foreign Nationals whether living in or outside Pakistan;
(e) Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); (f) Mutual funds, provident/pension/gratuity funds/trusts, (subject to the terms of their respective
Trust Deeds and existing regulations); and
(g) Branches in Pakistan of companies and bodies corporate incorporated in Pakistan.
2.4 FACILITIES AVAILABLE TO NON-RESIDENT PAKISTANI AND FOREIGN
INVESTORS
(a) Facilities available to non-resident Pakistani investors:
Non-resident Pakistani investors may subscribe for the public issue using their Special Convertible Rupee Account (“SCRA”) as set out under Chapter 20 of the Foreign Exchange Manual of the State Bank of Pakistan
(b) Facilities available to foreign investors:
Foreign investors may subscribe for the public issue using their Special Convertible Rupee Account (“SCRA”) as set out under Chapter 20 of the Foreign Exchange Manual of State Bank of Pakistan.
2.5 MINIMUM AMOUNT OF APPLICATION, AND BASIS OF ALLOTMENT OF SHARES
Following are the categories of applications which the applicant can opt for:
Category Application size
Reserved allocation of capital No. of shares allocated Maximum No. of applications that can be accommodated Amount (PKR)
A For 500 shares 25% of the
offer size 27,500,000 55,000 275,000,000
B For 1,000 shares 30% of the offer size 32,999,000 32,999 329,990,000 C For 3,000 shares 25% of the
offer size 27,501,000 9,167 275,010,000 D For 5,000 shares and in multiples thereof 20% of the offer size 22,000,000 4,400 220,000,000 Total 110,000,000 101,566 1,100,000,000
The basis and conditions for allotment of shares to the general public shall be as follows: (i) Application for subscription of less than 500 shares shall not be entertained; (ii) The minimum amount of application for subscription of 500 shares is Rs. 5,000.
(iii) Application for subscription of shares must be made for 500 shares or 1,000 shares or 3,000 shares or 5,000 shares or in multiples of 5,000 shares only. Applications, which are not for 500 shares or 1,000 shares or 3,000 shares or 5,000 shares or in multiple of 5,000 shares, shall be rejected;
(iv) SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS’ MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18-A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969;
(v) An applicant will be entitled to apply in one category only;
(vi) If the shares to be issued to the general public are sufficient for the purpose, all applications shall be accommodated;
(vii) If the shares applied for by the general public are in excess of the shares offered to them, the distribution shall be made by computer balloting separately within each category, in the presence of the representative(s) of the Karachi Stock Exchange;
(viii) In case of under-subscription of any category(ies) and over-subscription of other(s), the applicants of over-subscribed category(ies) will be allotted the shares of under subscribe category(ies). First preference will be given to the applicants who applied for 500 shares then 1,000 shares then 3,000 shares and then 5,000 shares category;
(ix) Any shares left unsubscribed after allotment in the manner as mentioned in (viii) above shall be allotted on pro-rata basis to the applicants who applied for more than 5,000 shares; (x) Allotment of shares will be subject to scrutiny of applications for subscription of shares; (xi) Applications, that do not meet the above-mentioned requirements, or applications that are
incomplete, will be rejected.
2.6 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS
The Company shall take a decision within ten (10) days of the closure of subscription list as to which applications have been accepted or are successful and refund the money in cases of unaccepted or
unsuccessful applications within ten (10) days of the date of such decision, as required under Section 71 of the Ordinance.
As per sub-section (2) of Section 71 of the Ordinance, if refund as required under sub-section (1) of Section 71 of the Ordinance is not made within the time specified therein, the Directors of the Company shall be jointly and severally liable to repay that money with surcharge at the rate of one and a half percent for every month or part thereof from the expiration of the 15th day and, in addition, to a fine not exceeding five thousand rupees and in case of continuing offense to a further fine not exceeding one hundred rupees for every day after the said 15th day on which the default continues. Provided that a Director shall not be liable if he/she proves that the default in making the refund was not due to any misconduct or negligence on his/her part.
2.7 MINIMUM SUBSCRIPTION FOR ALLOTMENT
The minimum subscription on which the directors will proceed to allot shares is Rupees 1,100,000,000 which has been fully underwritten, and in the opinion of the directors, must be raised in order to raise the capital required to the Company.
2.8 ISSUE AND DISPATCH OF SHARE CERTIFICATES
The Company will dispatch share certificates to successful applicants through their Bankers to the Issue or by crediting the respective Central Depository System ("CDS") accounts of the successful applicants within thirty (30) days of the close of public subscription, as per Listing Regulations of KSE.
Shares will be issued either in scrip-less form in the CDS or in the shape of physical scrips on the basis of option exercised by the successful applicants. Shares in the physical form shall be dispatched to the successful applicants through their Bankers to the Issue whereas scripless shares shall be credited through book entries in the respective accounts maintained with the Central Depository Company of Pakistan Limited ("CDC").
The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the relevant columns of the Application Form. In order to exercise the scrip-less option, the applicant(s) should have CDS account at the time of subscription.
If the Company makes a default in complying with the above requirements, it shall pay to the Stock Exchanges a penalty of Rupees 5,000 per day for every day during which the default continues. The Stock Exchanges may also notify the fact of such default and the name of the Company by notice and also by publication in the Ready-Board Quotation of the Stock Exchanges.
The name of the Company be notified to the members of the Stock Exchanges and placed on the web sites of the Stock Exchanges.
2.9 TRANSFER OF SHARES
2.9.1 Physical Scrips
Under Section 77 of the Companies Ordinance, 1984, the Directors of the Company shall not refuse to transfer any fully paid share unless the transfer deed is, for any reason, defective or invalid. Provided that the Company shall within 30 days (and in case CDC is the transferee, within five (5) days from the date on which the instrument of transfer was lodged with it, notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity, be entitled to re-lodge the transfer deed with the Company.
2.9.2 Transfer under book entry system
The shares maintained within the CDS in the book entry form shall be transferable in accordance with the provisions of the Central Depositories Act, 1997 and the CDC Regulations.
2.10 SHARES ISSUED DURING PRECEDING YEARS
The following are the details of the shares issued by the Company in preceding years.
Date Consideration No. of Shares Par value Premium
per share Amount
07 Mar 2005 Initial Subscription in cash 1,000,000 10 Nil 10,000,000
25 Feb 2006 Cash 165,989,850 10 Nil 1,659,898,500
01 Mar 2006 Cash 35,000,000 10 Nil 350,000,000
26 Sep 2006 Cash 6,747,460 10 Nil 67,474,600
30 Sep 2009 Bonus 208,737,310 10 Nil 2,087,373,100
Total 417,474,620 4,174,746,200
2.11 PRINCIPAL PURPOSE OF THE INITIAL PUBLIC OFFERING
The principal purpose of the proposed Initial Public Offering is to (i) repay PKR 1.469 billion to financial institutions as against the Company’s financial obligations arises out of payment of LCs, (ii) acquire 49 percent shares (397,027 shares of face value of PKR 100 per share) of WSPL at a price of PKR 1,234.18 per share amounting to PKR 490 million to make it a wholly owned subsidiary of Wateen Telecom Limited, (iii) broaden the investor base through an increase in the number of shareholders and (iv) provide the public investor an opportunity to participate in the future of the Company with sound prospects.
The 397,027 shares of the face value of PKR 100 each of WSPL are being purchased from Mr. Jahangir Ahmad. Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/- (for details see part 4.21).
Furthermore, Mr. Jahangir Ahmad was employed by the Company from 1 January 2007 to 31 December 2009.
2.12 INTEREST OF SHAREHOLDERS
Besides the interest specified herein below, none of the shareholders of the Company have any special or other interest in the property or profits of the Company, other than as shareholders of the Company. Two of the shareholders of the Company namely Mr. Parvez Shahid and Mr. Bashir A. Tahir, as joint owners of a property situated in Mouza Niaz Baig, Raiwind Road, Tehsil Lahore (the “Property”) have entered into an Agreement for Construction and Lease of Tower Building dated 11-05-2007 for the Property for constructing and renting a purpose built premises for the joint use of the Company and one of its associated company.
Furthermore, Mr. Parvez Shahid and Mr. Bashir A. Tahir, along with Mr. Tariq Iqbal Malik, CEO of the Company are joint shareholders of Wateen Multimedia (Pvt.) Limited which has a strategic partnership arrangement with the Company (detailed in section 4.19.1).
2.13 DIVIDEND POLICY
The rights in respect of capital and dividends attached to each share are and will be the same. The Company in its general meeting may declare dividends but no dividends shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the terms of the provisions of the Ordinance.
The Directors may from time to time pay to the members such interim dividends as appear to the Directors to be justified by the profits of the Company, subject to the covenants contained in the Finance facility agreements detailed in section 7.7.2 herein. No dividends shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits.
No unpaid dividends shall bear interest or mark-up against the Company. The dividends shall be paid within the period laid down in the Ordinance.
2.14 ELIGIBILITY FOR DIVIDEND
The Company in this matter will follow the provisions of Section 92 (2) of the Companies Ordinance, 1984, which reads as under:
“The new shares issued by a company shall rank pari-passu with the existing shares of the class to which the new shares belong in all matters, including the right to such bonus or right issue and dividends as may be declared by the Company subsequent to the date of issue of such new shares.”
2.15 DEDUCTION OF ZAKAT
Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and Ushr Ordinance, 1980. (XVIII of 1980) as may be applicable from time to time.
2.16 WITHHOLDING TAX ON DIVIDENDS
Dividend distribution to shareholders will be subject to withholding tax which is currently applicable at a reduced rate of 10 percent specified in Clause 20 of Part 2 of the Second Schedule to the Income Tax Ordinance, 2001.
2.17 EXEMPTION FROM CAPITAL GAINS
Capital gains derived from the sale of listed securities are not liable to income tax pursuant to Clause (110) of Part 1 of the Second Schedule of the Income Tax Ordinance, 2001. This exemption is presently available up to the income year ending June 30, 2010.
2.18 DEFERRED TAXATION
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from difference between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences are expected to be reversed.
As on June 30, 2009, the Company has made a provision of PKR 1,188 million on account of deferred tax liability.
2.19 FEDERAL EXCISE DUTY & WITHHOLDING TAX ON SALE/PURCHASE OF SHARES
• Federal Excise Duty (FED) of 16 percent is charged on brokerage commission on purchase / sale of shares on a Stock Exchange.
• Withholding Tax of 0.01 percent on sale/purchase value is charged on the purchase / sale of shares / Modaraba certificates / instruments of redeemable capital.
PART 3
3 UNDERWRITING, COMMISSIONS, BROKERAGE, AND OTHER EXPENSES
The present Issue of 110,000,000 shares at a price of PKR 10 per share has been fully underwritten as follow:
S. No. Name of the underwriters No. of shares Amount (PKR)
1 National Bank of Pakistan 20,000,000 200,000,000
2 Atlas Bank Limited 15,000,000 150,000,000
3 Arif Habib Limited 10,500,000 105,000,000
4 Habib Bank Limited 10,000,000 100,000,000
5 MCB Bank Limited 10,000,000 100,000,000
6 Bank of Khyber 10,000,000 100,000,000
7 Askari Bank Limited 7,500,000 75,000,000
8 Allied Bank Limited 5,000,000 50,000,000
9 KASB Bank Limited 5,000,000 50,000,000
10 Pak Oman Investment Co. Limited 5,000,000 50,000,000
11 Arif Habib Bank Limited 5,000,000 50,000,000
12 Faysal Bank Limited 2,500,000 25,000,000
13 Pearl Securities Limited 2,500,000 25,000,000
14 Wincom (Pvt.) Limited 2,000,000 20,000,000
Total 110,000,000 1,100,000,000
If, and to the extent, the Shares Underwritten are not subscribed and paid for in full by the Closing date for the public subscription, the Underwriters in terms of the underwriting agreements will, within 15 (fifteen) days of being called upon to do so by the Company, (i) subscribe and take up against full payment in cash or (ii) procure subscribers to subscribe and take up against full payment in cash, the shares remained unsubscribed subject to the maximum of the Shares Underwritten. In the opinion of the directors, the resources of the underwriters are sufficient to discharge their respective underwriting commitments.
3.1 BUY-BACK / REPURCHASE AGREEMENT
THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY-BACK / REPURCHASE AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON IN RESPECT OF THIS ISSUE.
ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATE(S) HAVE ENTERED INTO ANY BUY-BACK/REPURCHASE AGREEMENTS WITH THE UNDERWRITER(S) OR THEIR ASSOCIATE(S). THE COMPANY AND ITS ASSOCIATE(S) SHALL NOT BUY-BACK/REPURCHASE SHARES FROM THE UNDERWRITER(S) AND/OR THEIR ASSOCIATE(S).
3.2 UNDERWRITING COMMISSION
The underwriters have been paid an underwriting commission at the rate of 1.0 percent of the amount underwritten by them. In addition, a take up commission at the rate of 1.5 percent shall be paid to the underwriters on the value of shares required to be subscribed by them by virtue of their respective underwriting commitments.
3.3 COMMISSION TO BANKERS TO THE ISSUE
applicants will be paid by the Company to the Bankers to this Issue for services to be rendered by them in connection with this Public Issue, plus out-of-pocket expenses, if any.
3.4 BROKERAGE
Brokerage shall be paid to the members of KSE, LSE and ISE at the rate of 1.0 percent of the value of shares actually sold through them. No brokerage shall be paid to members of the stock exchanges in respect of shares taken-up by the underwriters pursuant to their underwriting commitments.
3.5 EXPENSES TO THE ISSUE
Expense Rate Amount (Rupees) Underwriting Commission 1.00% 11,000,000 Take up commission 1.50% 16,500,000
Bankers to the Issue commission 0.50% 5,500,000
Brokerage commission 1.00% 11,000,000
Consultant to the issue fees 1.50% 16,500,000
Printing, publication etc. 1,500,000
KSE listing fee and charges:
Initial Listing Fee 2,500,000
Annual Listing Fee 50,000
Service Charges 50,000
LSE listing fee and charges:
Initial Listing Fee 1,000,000
Annual Listing Fee 90,000
Service Charges 50,000
CDC fees and deposits 500,000
SECP Application and processing Fees 100,000
Legal Advisor Fee 500,000
Balloters, Transfers Agents and Share registrar fees 2,800,000
Marketing & advertisement 35,000,000
Stamp duty 500,000
Miscellaneous costs 1,000,000
Total 106,140,000*
*These amounts represent the estimated costs relating to the subscription amount, which may alter post-IPO.
PART 4
4 THE COMPANY
4.1 WATEEN TELECOM LIMITED OVERVIEW
Wateen Telecom Limited (“Wateen”) was incorporated in Pakistan under the Companies Ordinance 1984, on 4th March 2005. The business model of the Company was to initially focus on the wholesale
telecom market by becoming the leading carrier’s carrier by providing Long Distance and International (LDI), national transmission network (over fiber and VSAT services) and telecoms infrastructure. After successfully achieving this milestone, Wateen then focused on the consumer market through true broadband internet and telephony services as well as multimedia, TV broadcast services (through an affiliate) and value added services in Pakistan. The registered office of the Company is situated in Lahore. The Company commenced its commercial operations in LDI segment on 1 May 2005.
Wateen is owned by the Abu Dhabi Group, one of the leading business conglomerates in the United Arab Emirates (UAE) and is one of the largest foreign investor groups in Pakistan.
Wateen’s successful four years of operations in the telecom industry of Pakistan speak for itself, as it has successfully deployed the largest commercial and first nationwide 3.5 GHz WiMAX network in the world covering 22 cities and 1,100 sites. Rapid customer take up has helped Wateen acquire over 150,000 wireless broadband customers representing more than 60 percent of the total wireless broadband market. Additionally, 12,000 broadband customers over fiber with 2,700 corporate links (including 26 of the 31 commercial banks) and relationship with almost all the major GSM and telecommunication companies in Pakistan as its customers. Wateen is also proudly the largest operator of Satellite services in the country with 500+ MHz in commercial use and now also providing Satellite bandwidth services to telecom operators in Afghanistan.
Additionally, infrastructure of Optic Fiber network spanning more than 10,000 km (including Government of Pakistan USF1 projects) across all the four provinces of Pakistan including metro
connectivity in 22 cities powering 3 of the 5 GSM operators in Pakistan. Wateen also has been acknowledged as the largest alternative LDI operator in Pakistan (with over 1 billion minutes of traffic volume) duly acknowledged by the regulating authority PTA. Such remarkable performance has made Wateen the fastest growing telecommunication company in Pakistan, thus, making Wateen an icon in the industry and presents ample proof of the robustness of Wateen.
Sales performance has also been quite encouraging and consistent with over 20,000 monthly additions to the broadband internet and telephony subscriber base reflecting acceptance of the technology and more importantly of Wateen’s brand value in the market. Sales growth rate has been far steeper compared to the industry average, evident from the fact that Wateen enjoys over 60 percent share of the wireless broadband market. Wateen has an established sales channel network with a well trained wireless operation team for installation and support which together can be leveraged to ensure critical momentum. It possesses efficient and effective business processes including entire customer lifecycle management as well as the largest ISP call centre – (200 agents capacity) and robust pre/post paid billing system supported by a state of the art Business Intelligence (BI) system.
All the GSM operators and almost 80 percent of the commercial banks in Pakistan are using Wateen’s services in one form or the other including but not limited to dark fiber / data connectivity, VSAT (Satellite transmission), LDI services, etc. That just shows the reliability and dependability of Wateen’s telecom network and further compliments Wateen’s vision to be a “Carrier’s Carrier”. The current market dynamics of the telecom industry lead towards a price war between all the players - a natural result of a price war is increase in volume that will lead to higher capacity demand thus directly increasing business for Wateen’s services to the telecom and corporate industry and majority of these contracts with other telecom and institutional companies are based on a longer term basis.
1Sind FOC (703km, PKR 449mn); Baluchistan FOC package 1 (900km, PKR 374mn); Baluchistan FOC package 3 (1,069km, PKR 986mn);
Sargodha Broadband project (16,500 subs; PKR 239mn); Abbottabad Broadband project(3,250 subs, PKR 55mn); GTR Broadband – 5 Districts (26,500 subs; PKR 295mn); CTR Broadband – 5 Districts (56,000 subs; PKR 540mn)
Key financial highlights and achievements for last five years are:
All amounts are in PKR mn (except EPS) 2009 2008 2007 2006 2005¹ Revenue 16,184.80 9,289.10 4,448.30 2,793.80 14.6 Cost of sales 10,946.70 5,234.70 2,726.70 1,712.30 46.4 Gross Profit 5,238.10 4,054.40 1,721.70 1,081.50 -31.8 32% 44% 39% 39% -218%
General & Admin 1,920.60 1,715.80 854.2 564.8 12.7
Marketing & Selling 299.7 340.5 82 14 -
Operating Profit 3,017.80 1,998.10 785.5 502.7 -44.5 19% 22% 18% 18% -305% Depreciation 960 434.6 67.2 122.3 12.5 Other income 191.4 200 25.8 5.8 - Finance cost 568.4 204.7 165.9 15 - PBT 1,680.70 1,558.80 578.2 371.1 -57 10% 17% 13% 13% -390%
Provision for tax 532.1 474.6 192.7 144.3 -19.9
Non controlling interest 129.9 - - - -
PAT 1,018.70 1,084.20 385.5 226.8 -37.1
EPS 4.88 5.19 1.86 3.35 -37.1
EPS net Mgt fee 4.88 7.22 2.91 1.81 -37.1
• Largest alternative LDI operator in the country; over 1 billion minutes per annum including direct LDI routes / interconnects with major incumbents i.e., Etisalat, STC, BT, MOC Kuwait etc.
• Deployed fully redundant fibre optic network in record time • 8,000+ km on long haul across the country
• 1,700+ km metro in 22 cities in record duration • Tele-housing / Co-location facilities in 70 cities
• Largest operator of Satellite services in the country (c. 500+ MHz in use)
• Deployed triple play HFC infrastructure in Pakistan for 20,000 house passes with 50%+ take-up of households within few months of launch
• Largest commercial and first nationwide WiMAX network rollout in the world covering 22 cities and more than 1,100 sites (900 live)
• Major clients include
Carrier: Warid, CM Pak for dark fibre, Telenor for managed capacity and VSAT, Mobilink for OFC joint preventive measures
Corporates: Clients include 26 Banks, 8 Media companies, 13 Telecos & Carrier over 2,700 links in other corporates
Consumers: 150,000+ subscribers on WiMAX and HFC
• 26 out of top 31 banks use Wateen data network connectivity with 1,600 of the 5,000 on-line branches connected
• 8 TV Channels
• 13 Telco & Carrier customers
• 150,000+ broadband customers and 2,700+ enterprise links
• SWAP deal of fibre with the incumbent for alternative redundancy
• On an investment of PKR 2 billion, Company delivered cumulative revenue of PKR 37.5 billion, EBITDA of PKR 5.8 billion and profit of PKR 2.1 billion since inception to November 2009 including management fee
• Strategic vendor relationships, preferential pricing and vendor deferment of $75m as a Greenfield project. Wateen has secured $108 million dollars as vendor financing through reputable organizations such as MCC ($65 million) and ECGD ($43 million). Futhermore, Company secured local funding to the tune of PKR 14 billion and short term facility of PKR 3.5 billion
• Successfully completed VAR / PS (IP telephony, IP Contact Centre, Data Centre, Enterprise Data Network) project in Uganda, Congo and Bangladesh
• Cisco top customer Advocacy partner in the Middle East, Africa Region in 2006 • Established sales channel network which can be leveraged to ensure critical momentum • Well trained Wireless Operation team for installation and support
• Tested business processes including entire customer lifecycle management • Largest ISP call centre – (200 agents capacity)
• Robust pre/post paid billing system
• State of the art Business Intelligence (BI) system in place
Over the course of its operations, Wateen has successfully achieved strategic vendor relationships and preferential pricing. Wateen has also entered into long term contracts with major vendors and customers thus securing certainty in future cash flows.
Wateen recently closed the largest syndicate financing transaction for 2009 raising PKR 4.7 billion from leading banks in the industry even in these challenging times showing the confidence of the market in Wateen’s business model and operations. Moreover, Wateen also successfully closed one of the largest Islamic Financing deal of PKR 530 million in the same period. In addition to the above, Wateen has secured $108 million dollars as vendor financing through reputable organizations such as MCC ($65 million) and ECGD ($43 million).
ARCH-e’-decon a leading valuer in the telecom industry was engaged to assess the current value of Wateen’s key strategic assets and after a thorough scrutiny of the assets comprising the company’s fiber optic network (long haul and metro) and WiMAX licenses, their independent report suggested a replacement value of PKR 17.29 billion (current book value of these assets is PKR 1.64 billion) translating into intrinsic value of PKR 52.5 per share. Such a high intrinsic value share will now be available through the IPO at par value of PKR 10.0 per share - a huge discount for the people of Pakistan to benefit from. The said revaluation was only conducted for the management purpose and has not recorded in financial statement.
While Pakistan’s telecom industry continues to take positive steps towards the development of telecom infrastructure in the country, the massive boom in the mobile phone segment of telecom industry has also provided significant momentum for expansion and development in other segments of telecom as well.
4.2 COMPETITIVE FINANCIAL COMPARISON
PKR m WTL PTCL Telecard Pak Datacom Worldcall*
Balance Sheet as on 30 June 2009 PKR m
Total Assets 26,289 215,140 9,719 1,001 22,108 Paid Up capital 2,087 51,000 3,000 513 8,606 Total Liability 21,522 109,887 6,010 410 10,649 Equity 4,767 105,253 3,709 591 11,459
Cash Balance 397 21,186 10 127 279
Income Statemen t as on 30 June 2009 Revenue 16,185 92,720 3,791 1,042 3,990 Gross Revenue 5,238 37,375 1,181 403 645
Operating Revenue 3,018 16,081 589 228 52
Finance Cost 568 4,473 494 0.58 169
Profit Before Tax 1,681 16,739 95 249 (259)
Profit After Tax 1,019 10,923 44 162 (227) Earning Per Share 4.88 2.14 0.15 20.64 (0.26) Dividend Per Share - 1.50 - 14.45 -Key Ratios
Gross margin 32% 40% 31% 39% 16%
Net M argin 6% 12% 1% 16% -6%
Return on Equity 21% 10% 1% 27% -2%
Current Ratio 0.75 1.05 0.62 1.75 0.91
Total Assets Turnover 0.62 0.43 0.39 1.04 0.18
4.3 LICENSE DETAILS Nature of
Licence Term “Aggregate” Licence Fees
01-Dec-04 for 13 licences
Initial Licence Fee: US$180,000 04-Nov-04 for 5
licences
Initial Spectrum Fee: PKR116,405,379 Annual Fees/Payments: 0.5% plus 1.5% (“Universal Service Fund”) plus 1% (“Research & Development Fund”) of gross revenue from licensed services per annum
Annual Spectrum Fee PKR 14,268,000
Initial Licence Fee: US$3000 Initial Spectrum Fee: PKR 8,000,000 Annual Fees/Payments: 0.5% plus 2% (“Universal Service Fund”) of gross revenue from licensed services per annum
Annual Spectrum Fee PKR 740,000 Licence Fee: US$500,000
Annual Fees/Payments: 0.5% plus 1.5% (“Universal Service Fund”) plus 1% (“Research & Development Fund”) of gross revenue from licensed services per annum
Licence Fee: US$20,000
Annual Fees/Payments: 0.5% plus 2% (“Universal Service Fund”) of gross revenue from licensed services per annum
Data Licence Data Class Value Added Initial Licence Fee: US$4,762
Pakistan Services Licence Annual Fees/Payments: 0.5% of the
Annual Gross Revenue
Data Licence Initial Fee: US$3,704
AJK & NA Annual Fees/Payments: 0.5% of the
Annual Gross Revenue Class Value Added
Registration Certificate for providing video conferencing services
Initial Licence Fee: PKR 1'400,000 Initial In-house Channel Fee/ channel: PKR 340,000
Annual Fees/Payments: PKR 612,500 plus PKR 2 (plus tax) annually for each subscriber
* Services being offered through strategic partner
Wateen Licences Date
WLL Pakistan Wireless Local Loop Services in 14 regions (each region has separate licence), with two licences in 4 of the regions
20 years from the commencement date, renewable at discretion of PTA
WLL AJK & NA Wireless Local Loop Services in 2 regions (each region has separate licence),
3-Jun-09 20 years from the commencement date, renewable at discretion of PTA
20 years from the commencement date, renewable at the discretion of PTA LDI Pakistan Long Distance and International
Public Voice Telephone Services
26-Jul-04 20 years from the commencement date, renewable at the discretion of PTA
LDI AJK & NA Long Distance and International Public Voice Telephone Services
28-May-08
Cable TV * Cable TV transmission services in parts of Lahore and Multan
26-Dec-06/9-Feb-09 5 years from the commencement date, renewable at the discretion of PEMRA 15 years from the date of issuance
15 years from the date of issuance
Data Registration 5 years from the date of issuance Fee: US$124 Data Class Value Added Services
License Certificate
28-May-08
9-Jun-09 10-May-07
4.4 PRODUCT & SERVICES
Wateen’s product portfolio can be broadly summarized as under:
• Wholesale: Managed capacity / transmission media (OFC, VSAT), VAR / PS, Infrastructure & Telehousing, Hosted / Managed Solutions
• Retail: Internet, Data, Voice, enhanced Voice, TV, VAS, Portal By commissioning a ready-to-use
nationwide 10,000 km optical fiber network infrastructure within such a short time, Wateen has surpassed expectations and surprised the market by delivering a Next Generation Network (NGN) which offers affordability, reliability and convenient scalability. Not much time passed, another first-of-its-kind achievement followed, when Wateen deployed the World’s first 3.5 GHz WiMAX Broadband network countrywide in 22 cities of Pakistan which represents over 70% of the urban population and where over 85% of the national GDP is generated. More importantly, these cities represented approximately 90% of the target market of the 5 million2 internet
users as predicted by industry experts.
Concurrently, a multiple hub VSAT satellite network was put on air to enable transportation of information to places where no other telecommunication medium could be deployed that was not the end of the story, a Hybrid Fiber Copper (HFC) network was deployed in DHA, Lahore to deliver Triple Play (TV, Internet, Telephone) services followed by a GPON network in Pakistan, deployed in Multan for triple play services. That done, within a short span of time, Wateen had accomplished the fastest deployment of a multi-media Converged Network (Optical Fiber, WiMAX Broadband, VSAT, ISM Radio, HFC, GPON) in Pakistan covering the entire country and more importantly – available at affordable rates for customer service.
Yet the challenge remained. What products and services to offer to the target market? Should we fulfill demand and flow with the tide, or should the path be driven by innovation? We chose the latter, albeit a difficult route. With an incumbent in monopolistic dominance, and the market yearning for an alternative, the latter paved the way. Concurrently, Wateen had created an entry barrier for the next entrant, financially and technologically. With almost every License available for telecommunication services approved and issued to Wateen by the Pakistan Telecommunication Authority (PTA), the writing on the wall said – Go Ahead, let’s capture the market. The product roll-out commenced.
4.5 TARGET MARKET
The market space being inherently diverse and vast necessitated a portfolio of products that should not only meet existing demand but should go beyond. Wateen’s strategy was not to sell technology but to provide the best product line to customers so as to address their customer need at the right price. With a mobile phone industry booming, the broadband / data network segment growing, demand for access to the internet seeking exponential growth, and the voice (telephone service) market diversifying from the copper infrastructure to more flexible and conveniently usable and functionally superior products, the stage was set for Wateen. Primarily the market sought and continues to seek better, convenient, on-demand scalable facility for transporting information, or shall we say Content, from one point to another, with an insatiable appetite for capacity i.e. bandwidth colloquially called speed.
2 PTA; 5mn subs by 2014
With the market ready for to accept change for the better, our strategy was to sustain focus on the customer by meeting and exceeding their expectation, deliver innovative and functionally rich products, with rapid time to market. The imperative for sustained focus warranted a comprehensive understanding the customer. Market intelligence, primary research, and market demand factored in, identified two large segments namely the Corporate and Carrier segment and Consumer segment.
Data on consumer needs showed very high demand for internet access where consistent reliability, 24x7 availability, convenience of scalability or upgrades in bandwidth, responsiveness to customer service, nomadic or mobility of service i.e. quasi anytime-anywhere service and the ubiquitous demand for low on price. Supported by the ever increasing growth of personal computer penetration in the county and laptops becoming more and more affordable, and an estimated 5 million personal computer in use in Pakistan, lifestyle patterns demonstrate a changing pattern from talking to
messaging and emails, partying out to virtual social networking, from outdoor sports to electronic gaming, from audio to audio-video, from listening to watching, and of course to more serious social aspects of learning, research, and sharing knowledge.
The Carrier and Corporate segment is far more complex yet comfortably segmented. Mobile phone operators, Internet Service Providers (ISPs), Long Distance and International (LDI) telephone service operators, Wireless Local Loop (WLL) telephone service operators, Local Loop (LL) telephone service operators singularly consume the largest chunk of bandwidth capacity in the country, approximately 70% consumed by 73 companies. Very high consumption of bandwidth, equally high availability of network, concurrent utilization of multiple telecommunication medium, international connectivity, high focus on quality of service supported by Service Level Agreements (SLAs), geographically dispersed sites, decision making driven by value addition to business, and financially stable service provider, succinctly describes this segments expectations.
On the other side are the Corporate and Enterprise sectors of the national economy. We call it the Enterprise segment. With 57,000+ companies registered with the Securities and Exchange Commission of Pakistan (SECP), approximately 2,000 classify to be Enterprises i.e. multiple offices or outlets in the country. The Banking and Financial services industry is the largest member of this segment with 9,000+ branches. While another 6,000 outlets are estimated to represent other segment comprising Services and Distribution, Health and Education, Government and Defence, and Manufacturing and Construction. With this segment’s customers demanding better service levels, and innovative products, business entities have recently made significant multi-million dollar investments in sophisticated information systems. It is these very information systems and the desire to expand their reach to a larger customer base, generates demand for Wateen network portfolio. Secure, reliable, responsive, SLA based service, price/performance, single window multiple medium availability preference, primary and backup network facility, and flexibility of service provider to enable connectivity characterizes this segment.
A significant player in the market is the SME/SoHo segment. An estimated 350,000 entities make up this segment based on data available from SMEDA. The segment primarily demands access to internet and
telephone service with characteristics similar to the Enterprise segment with one difference, price is the eventual denominator.
Pakistan currently presents extremely favorable demographics for broadband proliferation. Over 50% of the country’s population is between the ages of 15 and 24 with an overall Computer penetration of around 5 million and 4 million internet subscriptions. With such huge opportunity for Broadband proliferation and traditional technologies such as DSL showing limitations due to a network of copper lines laid out in most areas around 50 years ago and hence failing to support transfer of heavy data, both wireless and optical fibre (HFC/GPON) based technologies are clearly going to lead the show for Broadband growth in Pakistan.
Wateen with its presence in 22 cities is ideally positioned to take-over as the runaway leader in the Broadband market; competitors in the WiMAX market such as Wi-tribe (present in only 3 cities) and Augere/Qubee and Mobilink Infinity (present in Karachi only) will take at least another 2 years to break into the market. Similarly, with 1,700 KMs of carrier grade metro fibre; Wateen has set-up a huge entry barrier for any other operator who would have serious difficulties in securing right of ways to match this number.
As more and more vendors such as Motorola, Huawei, ZTE and Green packet enter the WiMAX market in Pakistan, the cost of acquiring customers is going down which means that the growth for Broadband and in turn WiMAX is going to be more and more profitable.
4.6 COMPETITION
With Wateen’s product portfolio, the biggest challenge is the classification of competition. The breadth and depth of Wateen’s services often creates a situation where in a customer for one product is a competitor for another. On the consumer side, cellular operators, ISPs, LDIs, and fixed & wire line operators make up the competition; whereas on the carrier side, it is the same entities that comprise the customer base. At present, major players offering competition on consumer Internet and entertainment products includes PTCL, World Call, Wi-tribe, and Mobilink. The presence of substitute products such as GPRS and EDGE also puts the cellular operators in competition. On the business side, in addition to the competition offered by above mentioned players, Wateen also faces competition from system integrators, OEMs and other ISPs such as CyberNet and SuperNet, who have a strong presence in the enterprise (large and small) segment.
Wateen has many competitors for specific products but Wateen’s offering in the market is truly unique since no other singular player offers a similar product portfolio. The closest competitor in terms product range is PTCL but it does not offer VAR (Value Added Reselling) and PS (Professional Services) that form an integral part of Wateen’s product portfolio for the provision of “one window operations”. Wateen also did not face any issues of legacy infrastructure and therefore built the best NGN (Next Generation Network) allowing it to offer differentiated products at a lower cost of delivery compared to its competitors..
4.7 PRODUCT PORTFOLIO
Wateen offers a unique product mix allowing depth and breadth in its product portfolio to ensure we don’t just cater for customers needs but become part of the customers’ life. As Wateen was building a new company in a highly infant and fragmented market it leveraged its infrastructure and its key Unique Selling Proposition (USP) namely providing end to end solutions whether triple play for households (voice, internet, TV & mobility) or targeted corporate solutions across all the business needs for urban and rural connectivity.
4.8 WHOLESALE PRODUCTS
4.8.1 Transmission / Capacity 4.8.2 Dark Fiber
Never before had any telecommunication company in the country, created a Dark Fiber / IRU product. This entails a long term investment by the customer, creating an asset in the books of the customer, supported by a long term contract, with SLA and Operations and Maintenance (O&M) support, both preventive and corrective maintenance. Dark Fiber is leased to organizations seeking dark fiber connectivity on an IRU basis i.e. Indefeasible Right of Use which varies from 3 years to 20 years; depending on customer preference. Wateen only provides the customer with a pair of dark fiber and the customer is responsible for ‘lighting’ it up i.e. making it operational by setting up the required equipment. The product is positioned to match the insatiable appetite for bandwidth in the Carrier & Operator segment, specifically the mobile phone operators. With Wateen’s nationwide optical fiber network capacity almost at an unlimited level, Wateen introduced this product in the market to gain high margins and a quick ROI from optical fiber network.
Dark Fiber
Feature Advantage Benefit
• Nationwide and metropolitan fiber network
• Very high capacity bandwidth • Available on 5, 10, 15 and 20
years IRU
• SLA and O&M supported
• Ease of transporting high volume traffic, particularly voice traffic
• 24x7x365 availability • Scalability without any
additional CAPEX as customer base and demand grows
• Addition of asset appreciate net worth of the company • Offer affordable products to
customers
• Grow market share
4.8.3 Lambda service
Wateen Lambda service provides 10Gbps connectivity over fiber, by ‘lighting’ up just a single wavelength from the full optical signal, stretching up on the nationwide fiber network. The allocation of bandwidth over the lit-up Lambda is targeted to serve as the secondary/redundant link for the carrier, ensuring high reliability and availability imposed through the Service Level Agreement (SLA).
Lambda service
Feature Advantage Benefit
• Nationwide network • High capacity bandwidth
• Available on 5, 10, 15, and 20 years IRU
• SLA and O&M support
• Ease of transporting high volume traffic, particularly voice and internet traffic • 24x7x365 availability • Scalability without any
additional CAPEX as customer base and demand grows
• Offer affordable products to customers
• Grow market share
4.8.4 Managed Capacity
Where customers seek lower capacities of bandwidth, Wateen offers managed capacity on its fiber and VSAT networks. Wateen’s clear channel circuit or Layer 2 MPLS Virtual Private Network (VPN) also known as L2VPN, is a point-to-point “pseudo-wire” service. It is used to replace existing physical links based on TDM circuits. This model is mostly suitable for customers who have a traditional hub and spoke network topology. All sites are connected to an aggregation site which serves as the regional hub resulting in a point to multipoint link between the aggregation site (the hub) and the remote sites (spokes).
Managed Capacity
Feature Advantage Benefit
• Capacity available on nationwide and Metro network from E1 to STM64 (2Mbps to 10Gbps)
• Offered in 71 cities of Pakistan through fibre and VSAT
• Monthly service charge • SLA and O&M supported • Secure transmission
• End to End network • 24x7x365 availability • No CAPEX required
• Save infrastructure costs and expense
• Lower network management resources and expense
• Offer same rates for Karachi and upcountry sites.
4.8.5 DPLC & IPLC and IP Transit
As the demand for consumer broadband grows, the supply required to fuel that growth will also increase. This is where the role of DPLC, IPLC, and IP-Transit comes in. DPLC provides for domestic transport within Pakistan, whereas IPLC provides transport across international destinations. For DPLC (Domestic private leased circuit) Wateen uses its own Optical Fiber network both on the nationwide and metropolitan area networks, whilst for an IPLC (International private leased circuit) various submarine cable systems are used.
IP-Transit, simply put, is raw Internet bandwidth which operators and large organizations acquire to have presence on the Internet backbone. With the growth of consumer broadband, not only has broadband proliferation increased, but also the size of average bandwidth pipe going into consumers households. Due to this reason, IP-Transit has consistently seen triple digit growth in the last two years. As per PTA’s forecast of over 4.3 million broadband subscribers by the year 2013, IP-Transit will outgrow its current growth rate.
DPLC, IPLC and IP Transit
Feature Advantage Benefit
• Nationwide and International connectivity
• Available in Half as well as Full circuits
• Offered on various bandwidth levels • Monthly service charge
• Can carry data, digitized voice, fax, video or any other form of digital transmission, at
bandwidths from 64 kb/s to 1000 Mbps
• 24x7x365 availability
• Offer affordable products to customers for their domestic and international connectivity requirements.
• Possibility of interconnects with various telecom operators abroad • Solicits inbound traffic
towards the customer from ISPs; and vice versa 4.8.6 Co-location/Tele-housing
For our strategic partners, Wateen provides state of the art facilities for Co-location/Tele-housing, to deploy their infrastructure. The sites have a provisioning of inter carrier connectivity, space, security, fire detection/suppression, back up power and bandwidth capacity.
Co-location / Telehousing
Feature Advantage Benefit
• Provision of inter carrier connectivity
• Fire detection/suppression • Back up power and bandwidth
capacity
• Monthly service charge
• 24x7x365 Technical Support • NOC performance monitoring
• Closed Circuit Video monitoring and Logging at entry points
• Carrier neutral environment
4.8.7 System Integration
Intricacy of IP and Unified Communication services is experiencing a spontaneous rise. This is the age of policy-based, network-intensive, and speedy and high bandwidth and business-critical multimedia applications that bring together secure data, voice and video capabilities. Yet it is unlikely that companies may find suitably skilled and specialized people in their own existing set up.
Wateen has largest team of highly skilled and certified staff, with international project experience in the products of Cisco Systems, Polycom, IBM, Microsoft, Oracle, DELL, EMC, Riverbed, Axis, McAfee, Globitel, BARCO, Schmid and other multiple leading technology providers. This has enabled Wateen to be the leading Solution Provider in the market, offering customised, cost effective solutions generating quick ROI’s with expertise in design, swift deployment and seamless integration.
With this approach, Wateen has now the largest market share in System Integrator in Pakistan for the last three years with its penetration in Services Providers, Financial, Educational, Industrial Sectors, Hospitals, Hotels and Shopping Centre and SMEs.
