Name of the Company: Omantel
Business Sector: Telecom
Operating Geography: Middle East, Oman
About the Company: Omantel a pioneer of total communication in the Sultanate of Oman was founded in 1980. It has been a pillar of the Omani economy and has played a leading role in Oman’s progress and development.
Revenue: 514.3 RO mn (2015) (1.33 bn USD)
SWOT & PESTLE Analysis
|1. Strong financial performance|
2. Leading Omani Telco
3. Government support
4. Strategic investments across the telecom sector
|1. Low subscriber growth
2. Limited market
|1. Acquisitions |
2. Partnerships in promising technology areas
3. ICT offerings
|1. Falling oil prices
2. Liberalized domestic market
3. High interest rates
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1. Strong Financial Performance: Omantel posted a strong financial performance in FY 15 with a top line growth of 6.9%, which was also the highest revenue in last four years. The company has also decided to impair its investment in Pakistan based Worldcall Telecom (WTL) which has been a consistent underperformer since 2008 and affected Omantel’s overall results and this move will clean its accounts. Omantel is rated at ‘BBB’ and ‘A3’ by S&P and Moody’s respectively
2. Leading Omani Telco: Omantel is the leading telecom player in Oman with an estimated market share of almost 60% in mobile network in both subscribers and revenue. Its share in fixed lines is estimated to be 78% with revenues in the segment at 82%. Its network reach is across the Sultanate and is the leading integrated telecom service provider. It is also Oman’s Most Valuable Brand according to a study by Brand Finance.
3. Government Support: The government of Oman holds 51% stake in the company, thus it enjoys government support and overall stability. With the government of Oman being a major stakeholder they have a lot of resources available to make sure that they get the best and the latest infrastructure at their disposal. Also, as the government is the major shareholder, many investors have a sense of comfort and do not mind investing in the company.
4. Strategic Investments across the Telecom Sector: Omantel’s holds 60% stake in its subsidiary, Oman Data Park which offers services such as managed hosting, cloud hosting, managed services and security. The investment in Oman Data Park extends its reach across the other areas and enables it to build a platform to offer comprehensive services to its clients.
Omantel also holds a ~41% stake in Oman Fibre Optic Co SAOG (OFOC) which is a manufacturer of high quality optic fibre in Oman.
1. Low Subscriber Growth: Omantel’s posted a subscriber growth of just 1.3% in 2015 (excluding Mobile Resellers). It needs to keep up the subscriber additions to counter lower ARPU amidst higher competition.
2. Limited Market: Omantel is currently offering services only in Oman. It is fully dependent on the Omani market. It has not been able to expand to other regional countries in the Middle East or anywhere across the globe. It also impaired its stake in Pakistan based Worldcall Telecom in 2015, which was performing poorly.
1. Acquisitions: Omantel is taking steps to make sure they have the widest network coverage. It is taking over the smaller players so that their reach increases. They are also forging alliances with strategic partners so that they can have access to regions where otherwise they would not have reach.
2. Partnerships in Promising Technology Areas: Omantel in a bid to improve their services is partnering with the likes of Ericsson, SIGFOX, Huawei, EMS and cashing on the opportunities that can be created with such alliances. It has partnered with SIGFOX, a leading provider of Internet of Things (IoT). This partnership will help Omantel offer connected solutions for smart manufacturing across industries in the Sultanate. In another partnership with Huawei, it will Install Smart Cities Lampposts. It has also partnered with EMS for bringing out WiFi hotspot services across the Sultanate.
3. ICT Offerings: Omantel also has formed a dedicated ICT wing within the organization to offer solutions in areas such as connectivity next generation smart technology. According to Gartner, Middle East IT spending reaching $212.9 billion in 2016 and Omantel has good opportunity in this area and it can leverage on its telecom infrastructure.
1. Falling Oil Prices: The drastic fall in oil prices will have an impact on business in Oman and the rest of Middle East and their spending which will also ultimately impact the telecom sector.
2. Liberalized Domestic Market: Oman has a liberalized telecom market which has increased competition over the years. Ooredoo Oman (formerly Nawras) is the other major player in the Sultanate. A new player Awaser-Oman has started to offer internet services using the state owned Oman Broadband Company’s (OBC) fiber infrastructure from 2016, thus increasing the overall competition in the market.
3. High Interest Rates: High interest rates in the Sukuk market forced Omantel to cancel its Sukuk offering in February 2016. Continuity of higher rates may affect Omantel’s ability to raise funds from the market (2).Omantel SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
1) Omantel Annual Report 2015: https://www.omantel.om/wps/portal/Omantel/Investors/Presentations
2) Omantel scraps Sukuk issue: http://omanobserver.om/omantel-scraps-sukuk-issue/
3) Omantel to deploy Huawei Smart Lamppost: www.telecompaper.com/news/omantel-to-deploy-huawei-smart-lamppost--1129976
4) SIGFOX and Omantel Join Forces to Rollout Dedicated IoT: http://makers.sigfox.com/press/2016/04/13/SIGFOX-and-Omantel-Join-Forces-to-Rollout-Dedicated-Internet-of-Things-Network-in-Sultanate-of-Oman/
5) Omantel partners with EMS for public WiFi hotspots: http://www.itp.net/608732-omantel-partners-with-ems-for-public-wifi-hotspots
6) Omantel reveals dedicated division for integrated ICT solutions: http://timesofoman.com/article/90627/Business/Omantel-reveals-dedicated-division-for-integrated-ICT-solutions
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