Oman to sell telco stake to boost competitiveness

Gov't plans to sell stake in Omantel to long-term investor, agrees to cut royalties.

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By  John Irish and James Cordahi Published  October 3, 2007

Oman said on Wednesday it plans to sell a stake in its Oman Telecommunications (Omantel), one of two national telecom providers, to a long-term investor to make the company more competitive overseas.

It also agreed to cut the royalties Omantel pays to the government for fixed-lined services to 7% from 10% of revenue - less payments such as for interconnections fees, and for mobile phone services to 7% from 12%, Economy Minister Ahmad bin Abdul-Nabi Mekki said, according to state-run Oman News Agency (ONA).

Omantel is seeking to expand overseas after losing its mobile phone monopoly in 2005 and 40% of its market share in the country of 2.5 million people.

The firm, which is 70% owned by the government, is able to buy back some of its shares listed on the exchange, ONA said, without being more specific. The agency did not give more details.

"It's correct that the royalties should be reduced," said Ross Cormack, Chief Executive of Omantel rival, Nawras, which is 70% owned by Qatar Telecommunications (Qtel). "It should stimulate investment in the country."

Oman sold 30% of Omantel in 2005, raising 280.8 million rials ($729.5 million) in the country's biggest initial public offering (IPO).

Omantel Chief Executive Mohammed Al-Wohaibi and Amer Awadh Al-Rawas, Managing Director of Omantel's mobile phone unit, could not immediately be reached for comment.

Omantel said last month it agreed to buy a majority stake in Pakistani wireless local-loop operator World Call.

The deal would give it a foothold in the world's third-fastest growing telecom market.

Nawras expects to make its first profit during this quarter after taking 40% of the mobile phone market in 30 months of operations.

The company had about 900,000 users, Cormack told Reuters last month, about 250,000 more than it expected to have by that time.

Omantel made its second consecutive record profit in the second quarter after boosting interconnection revenue from Nawras and adding more phone users.

Net income in the three months to June 30 rose 13% to 24.45 million rials, Reuters calculated in August from first-half company data.

The number of Omantel phone users rose 12.3% to 1.73 million at June 30, compared with 1.54 million a year earlier, Al-Wohaibi said at the time.

Shares of Omantel closed up 2.81% on Wednesday.

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