Oman Telecommunications said first-quarter net profit plunged 33 per cent as the cost of sales and expenses more than tripled.
The sultanate's largest telecom operator said net income attributable to the shareholder of the company for the first three months of the year fell to 16 million Omani rials (Dh152m) from the same period a year earlier, according to a regulatory filing with the Muscat Securities Market on Wednesday.
The earnings missed the average 18.7m rials estimate of analysts polled by Bloomberg. Losses from the cost of sales widened to 169.6m rials while operating and administration expenses expanded to 140m.
"Our focus is on maximising the share of wallet and value for customer...this will assure we can further grow our position in the market," the company said. "The recent acquisition of a stake in Zain will enable Omantel to diversify its revenue sources and contribute to the creation of an added value to the shareholders of both companies, and will provide opportunities for integration between the two companies as well as to find a strong platform to compete more effectively in the market and overcome the risks of being in a single market."
Omantel bought a 12.1 per cent stake in telecom operator Zain in November last year, bringing its total stake to 21.9 percent. Omantel is the Kuwaiti company's second largest shareholder after the country's sovereign wealth fund, the Kuwait Investment Authority. Last month Omantel issued $1.5 billion bonds in two tranches, the proceeds of which will be used to repay a bridge loan facility taken for investment in Zain Kuwait.
Omantel said revenue more than tripled to 470 million rials, of which Zain Group accounted for 325.2 million rials. Omantel's acquisition of Zain is its first major foray beyond its home market. Ten years ago the Omani operator acquired Pakistani ISP Worldcall, but offloaded the investment in 2017.
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In November, Moody's Investor Service said it downgraded Omantel's long-term issuer rating to Baa3 from Baa2 due to the US$2.2 billion of debt it took on after it bought a 21.9 per cent stake in Zain.
Moody’s said any increased debt levels may cause it to downgrade the credit rating of Omantel or if the sovereign credit rating of Oman is lowered.
In October, Oman abandoned the bidding process for the third mobile operator license in the country in favour of a local consortium backed by its sovereign wealth funds.
The company said the stabilisation of oil prices "will likely result in a positive market growth in the medium and long term" and the growth of data consumption in both fixed and mobile provides an opportunity to grow revenues.