Why would OmanTel care about investing in Pakistan’s Telecom sector?

June 24, 2007 10:31 pm 0 comments

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Note: This post was originally written by Mr. Muhammad Farooq, Senior International Editor for ITInsight, and was written first for the TelecomPK blog.

Oman Tel the fixed monopoly which ranked 1st this week among Oman’s top 20 listed companies posted impressive numbers like total revenue of RO 323.6 million during 2006, a hefty increase of 20% over 2005, and a net profit of RO 81.1 million. So what do you do when your pockets start to get deep… well….

First you overhaul your network backbone by migrating to NGN since competition is staring you in the eyes (whisper from the rumor mill is that Nawras, the second mobile operator in Oman is next in line to become the second fixed operator also). OmanTel recently shelled out close to 7 million O.R. when it selected Huawei to beef up its network, which was a repeat of 2005 when, Huawei provided WLL to OmanTel as the sole vendor; ever since both have enjoyed a very warm relationship. It is anticipated that Oman Mobile the mobile ‘semi-arm’ (it’s a long saga) of OmanTel is also riding on the coat-tail of its parent and plans to upgrade soon. The three way tug of war between Ericsson, Huawei and the newly wed – Nokia/Seimens is on for the LAST slice (for now) of Omani Telecom pie.

Second you start searching for greener pastures beyond your border; and that is exactly what OmanTel is doing. Granted it is a bit late, since most of the new licenses have evaporated despite the huge price tags that they carried and a lot (not all) markets are facing saturation. A number of Gulf operators headed south to Africa but the latest trend has been north to Afghanistan (etisalat), Bangladesh (warid tel), Pakistan (etisalat & warid tel), and the likes.

So why now and why Pakistan?

– The ‘Etisalat’ factor: With a local population of less than 4 million,
Oman has generally followed in the foot steps of its neighbor, UAE, but in a cautious way. Hence, the tourism, real estate projects etc and now the plans of getting into Pakistan, after all following in the footsteps of Etisalat can’t be that bad! Emirates Telecommunications Corp. which bought a 26 percent stake in Pakistan Telecommunications Co. Ltd. for $2.6 billion in 2005 is working on expanding its share to 51%. OmanTel currently commands a subscription base of 1.6 million, a growth of 15% compared to 2005. It’s more like; if Etisalat is the biggest (and yes it wants to be in the top 10 by 2010), OmanTel is the biggest little TELCO in the region. The name of the target is not mentioned but it is believed to be Worldcall, which runs long distance and international as well as wireless local loop services.

– Proxy Wars: Qatar Telecommunications Co. which coincidently the same week said that it had completed the purchase of a majority stake in Pakistan’s Burraq Telecom, hoping to tap Asia’s fourth-most populous country, is the parent company of NAWRAS, the second mobile operator in Oman and a thorn in the side of Oman mobile, (the mobile arm of OmanTel). Word on the street is that NAWRAS will also become the second fixed operator on OmanTel’s turf. May be Omantel feels that it is time to counter Qtel at both fronts; is Pakistan going to witness the start of ‘Telecom proxy wars’?

– Yemeni adventure: This is NOT the first time that OmanTel has flexed its muscles. However, their Yemen affair turned sour and they decided to bow out of the third GSM license. UNITEL, a combination of Yemeni and Chinese partners, in addition to some Gulf state investors, came in first in the bid for US$ 149 Millions as license fees, against US$ 100 Millions by the Omanis.May be they feel its time to get up, brush off the dust and saddle up again.

As this is being posted, OmanTel has stated its desire to grow in the Gulf region as well.

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