Omantel takes crucial step in crowded sector

Increases stake in Oman's top provider of fibre optics

The telecommunications sector is becoming increasingly congested in Oman, forcing companies to scramble to keep market share. Oman Telecommunications (Omantel), the country's largest operator, has taken a step in that direction by increasing its stake in Oman's top fibre-optics provider. Omantel yesterday told the Muscat Securities Market it has received approval from the sultanate's Capital Markets Authority to increase its stake in Oman Fiber Optic and become its largest shareholder. Omantel already owns a 25 per cent stake in Oman Fiber and plans to buy another 15 per cent. Oman Fiber is the only designer and provider of fibre-optic networks in Oman.

"This is a strategic company and is the backbone of the Omantel's fixed-line infrastructure," said Chandresh Bhatt, a telecoms analyst at Global Investment House in Kuwait. "It makes sense to increase the stake in the company to strengthen its operational base and its position in the market. "Oman Fiber is also the main network provider and increased stake in the company will help Omantel valuations as well."

Since the entry of Nawras, the second telecoms operator in the sultanate, Omantel is facing increased competition, which will intensify further when Nawras launches its own fixed-line telephony services this year. Mr Bhatt said that despite difficult market conditions, Omantel had the highest dividend yield ratio among its regional peers and could generate plenty of cash. Omantel reported 2 per cent revenue growth in the first quarter of this year and its net profit rose 67.7 per cent from the fourth quarter of last year.

The operator also said damage to its infrastructure and property caused by Cyclone Phet, which hit Oman last month, would have no effect on the company's financial results. Omantel's shares have been rising of late after sharp declines last month. They are up 9.5 per cent since hitting a 52-week low of 1.060 rials on June 6. The shares yesterday closed marginally higher at 1.161 rials.