Omani telco to up investment, plans IPO

Nawras to invest $260mn this year, looking to sell 40% stake, CEO says.

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By  Ola Galal Published  March 12, 2008

Nawras, the Omani unit of Qatari telecom Qtel said it plans to boost investment this year to increase market share and hired two banks to advise on a possible initial public offering (IPO).

"We will invest 100 million rials ($259.8 million) in infrastructure, people, marketing and customer services in 2008," Nawras Chief Executive Officer Ross Cormack told Reuters in an interview late on Tuesday.

The company spent 80 million rials last year on capital projects.

Nawras hired an international bank and a "major" local bank to advise on selling a 40% stake, Cormack said. The company's licence requires it to sell shares to the public by 2010.

In October, the government cut royalties on mobile phone services to 7% from 12% and on fixed-line services to 7% from 10%. The cut was retroactive.

"The royalty cut saved us 2 to 2.5 million rials last year, so it would save at least that much this year... we will use investments that it frees up to build further infrastructure this year than we would have done," Cormack said.

Qtel, the fifth-largest Gulf Arab telecom firm by market value, started Nawras in 2005 with Denmark's and Omani investors, ending the monopoly of Omantel.

"We doubled our customer base as we went from 500,000 at the end of 2006 to just over one million a year later," Cormack said. Revenue almost doubled in the 12 months to December 31, with the company posting its first profit in August, Cormack said, declining to be more specific.

"The revenue jump was helped by economic and population growth, and by the expansion of the company's technological services, such as mobile email," Cormack said.

Qtel said last month fourth quarter net profit fell 9.6% due to a one-off amortisation impact associated with its March purchase of Kuwait's Wataniya.

Net income in the three months to December 31 fell to 366 million riyals ($100.6 million) from 405 million riyals in the year-earlier period, the state-controlled telecom operator said.

Nawras rival Omantel in January posted its second-biggest profit ever in the fourth quarter after a cut in government royalties helped control costs. It also beat analysts' forecasts.

Net income in the three months to December 31 surged almost 47% to 29.43 million rials ($76.46 million), compared with 20.07 million rials in the year-earlier period. (Reuters)

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