Omantel's profit slides as costs rise

Oman's incumbent operator sees profits decline by 21% in the first nine months of 2010

Tags: OmanOman Telecommunications Company
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Omantel's profit slides as costs rise Omantel attributed the decline in profits to costs associated with its "aggressive" network expansion.
By  Roger Field Published  November 11, 2010

Omantel, Oman's incumbent operator, experienced a 21.6% fall in net profit in the first nine months of the year, which the company attributed to costs associated with network expansion.

Omantel's net profit fell to OR83 million ($214 million), from OR105.8 million in the same period last year.

"The decline in net profit [...] is attributable to an increase in expenses driven by a massive investment in expanding the network to enhance customer experience and expand the network reach, such as 3.5G network roll-out, transforming the network into an IP core intelligent network, and the deployment of other new technologies," the company said in a statement.

The company's expenses reached OR224 million, compared to a figure of OR190 million for the same period in 2009, due to the network expansion.

Profits declined despite a rise in revenue. Omantel's total revenue grew by 3.9% compared to the same period in 2009, to reach OR316 million.

Omantel sought to downplay the decline in profit by explaining that its 2009 results had benefited from "one off items" including OR3.64 million towards the settlement of an insurance claim and a reversal of bad debts amounting to OR2.8 million. "Excluding these one-off items, the normalised net profit for the first nine months of 2009 was OR100 million," the company said.

Omantel has invested heavily in its network in the past year, as it seeks to compete with second operator Nawras, which has managed to acquire a market share of some 45% in the  mobile sector since it launched in 2005, and which also won Oman's second fixed licence last year.

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