How to Measure the GCC Dark Horse: Oman Telecom Industry

The Oman telecom industry is thriving and contributing to the country’s economic growth and technological advancements.

• Oman’s telecom industry has shown significant progress in recent years, with decreasing package prices, increased data usage, etc.
• Omantel has made strategic acquisitions and investments, while also focusing on technological advancements, community partnerships, and corporate financial performance.
• Ooredoo Oman aims to attract customers through tailored services, community-focused initiatives, and partnerships to enhance customer experience.
• Vodafone Group Plc entered Oman’s telecom market, bringing innovation, investment, and digital contributions to the sector, achieving significant milestones in its first year of operations.

The Sultanate of Oman is the third-largest country in the Arabian Gulf. However, it is often overshadowed by its neighboring countries, Saudi Arabia and the United Arab Emirates (UAE). Nevertheless, in recent years, Oman has proved to be a growing powerhouse. In fact, it made headlines when Sheikh Faisal Al Rawas, Chairman of the Oman Chamber of Commerce and Industries (OCCI), and Dr. N. M. Sharafudeen, Chairman of the Indo-Gulf and Middle East Chamber of Commerce (INMECC), signed a Memorandum of Understanding to boost economic, commercial, and trade activities benefiting both countries. Oman telecom industry is one of these economic boosters.

Back to Basics

In 1964, Oman saw a shift in its economy from agriculture, fishing, and overseas trading towards a reliance on the production and export of petroleum. As a result, oil constitutes two-fifths of the country’s gross domestic product (GDP), and three-fourths of the Omani government’s income. However, to truly understand how a country is thriving, we need to look at its telecommunications operators since telcos are excellent mirrors of a population’s prosperity and a country’s economy.

As of February 2023, Oman has topped the GCC telecommunication services, recording a significant decrease in package prices compared to previous years, and a remarkable increase in the average monthly data usage volume per beneficiary by 17 percent. The Telecommunications Regulatory Authority of the Sultanate of Oman (TRA) paved the way to such excellence by publishing the Access and Interconnection Regulation (A&I) in April 2016. This decree made the Omani market accessible to new telecommunication license holders and resellers, promoting investment in the industry and healthy competition. Now, by law, all telcos operating in the Sultanate that offer their services to the general public must grant access to the infrastructure to requesting parties.

Today, a total of six mobile network operators (MNOs) in the Oman telecom industry cater to a population of approximately four million. The market leader is Omantel, followed by the Omani Qatari Telecommunications Company, known as Ooredoo Oman, and the newly announced telecom operator anchored by Vodafone Group, Vodafone Oman.

Shooting for the Moon

Oman Telecommunications Company (Omantel for short) is the first Omani telco and the country’s primary provider of internet services. In fact, the Omani government still owns a 51 percent share. This MNO is known for bold moves in the sector, such as its purchase of 65 percent of WorldCall Pakistan in 2008, which was arguably the biggest transaction of its kind in the MENA region. Additionally, Omantel became the second-largest shareholder of Zain Group with a 21.9 percent stake, following the purchase of a 12.1 percent stake worth $2.19 billion in 2017.

According to Omantel’s disclosure of the Audited Financial Results for the year ended December 31st, 2022, the year 2022 saw the completion of key initiatives that significantly helped in deleveraging the balance sheet and achieving an optimized capital structure. Adjusted for the profit from discontinued operations, dividend income from Zain group, and finance costs concerning its investment in Zain group, net profit for the year stands at $169.087 million (OMR 65.1 million), compared to $190.387 million (OMR 73.3 million) in the year 2021, representing a decrease of 11.1 percent.

The reduction in earnings before interest, taxes, depreciation, and amortization (EBITDA) is the main cause of the decline in adjusted net profit. Additionally, due to increased market competition, this decline is attributed to a decrease in prepaid mobile revenue. However, the increase in mobile postpaid revenue and fixed broadband revenue, which increased by 11.2 percent and 3.3 percent, respectively, more than makes up for the decline in prepaid mobile revenue. This was further fortified by a decrease in operating expenses and the allowance for receivables’ impairment. The Zain Group generated $5.6 billion in combined revenue and $640 million in combined net income in 2022.

Ever since the competition tightened, Omantel has taken an interesting approach to make itself stand out. Being the country’s first-ever telco, it has already garnered popularity and loyalty from Omanis. So, it set its sights on being technologically advanced. The more it has to offer in terms of shiny new technology, the more intrigued new subscribers would be. In fact, over the last couple of years, it has created an online shopping platform, led the Middle East in 5G adoption, and was the first to launch the eSIM in the Sultanate. And while it made headlines for its community-oriented work— its six-years-long-and-counting partnership with Dar Al Atta Charity—the Omani MNO kept pushing the boundaries of technology by successfully testing 5G mmWave in Oman in collaboration with Ericsson, a leader in Information and Communication Technology (ICT).

Capturing Hearts

Omantel’s biggest competition is Ooredoo Oman (formerly known as Nawras), the sultanate’s first privately owned telco. Parented by the Qtel Group (currently known as Ooredoo Group), the Qatari Telecommunications Company SAOG entered the Omani market in 2004. Today, it offers its subscribers a wide range of services, including but not limited to voice and data services over several mobile network generations. Its biggest highlights in 2022 were receiving Telecom Review’s Best Middle East Digital Customer Experience Award and achieving Bronze for the Stevie Awards Middle East’s “Excellence in Innovation in Technology Industries.”

The Ooredoo Group released its financial results for 2022, showing an increase in net profit of 26 percent to $769 million (2.8 billion QAR) and a four percent increase in revenue to $6.2 billion (22.7 billion QAR). Ooredoo’s total customer base across all its operating markets consists of 56 million people. It is important to note that major non-recurring items and Indosat Ooredoo are not included in the normalized Proforma numbers disclosed.

According to His Excellency Sheikh Faisal Bin Thani Al Thani, the chairman of the Ooredoo Group, the telco closed the 2022 fiscal year with revenue exceeding $6 billion. Aziz Aluthman Fakhroo, Managing Director of Ooredoo, disclosed that “Ooredoo Oman delivered a solid performance in 2022, closing the year with a five percent growth in revenue, driven by growth in postpaid, devices, and wholesale revenues.” By the end of 2022, the Omani telco’s customer base had also increased to three million.

Unlike Omantel, Ooredoo Oman has yet to garner loyalty from its citizens in the Oman telecom industry. So, in a stroke of marketing genius, the company opted to attract customers through offers and services tailored to their needs, rather than offering what could be perceived as luxuries. The people at Ooredoo Oman seem to want to uplift the community. In fact, every year, the telco giant offers National Day promotions and regularly seeks to train and hire Omani employees. Additionally, in November 2022, it offered five times the 5G data for free with its monthly business digital plan until mid-February. But that is not to say that the Omani telecom giant neglected its technological capabilities. It actually partnered with Ericsson to migrate and consolidate its online charging system. The state-of-the-art Ericsson Charging System will allow Ooredoo’s customers to retrieve and update account information, keep track of costs, balances, and bonuses, and enjoy available products online and in real-time without experiencing “bill shock.”

Coming for the Crown

Amid the COVID-19 pandemic, Vodafone Group Plc acquired the license to establish and operate public telecommunications services in Oman. In September 2021, it partnered with Ericsson to deploy 4G and 5G core and radio access networks (RAN), making it the third Omani MNO. Recently, on March 20th, as the cherry on top of a successful first year of operations, Vodafone Oman received three Gold and one Bronze accolades from the 2023 Middle East & North Africa Stevie Awards in recognition of its digital, creative, and impactful contribution to the Omani telecom scene.

The parent company reported good financial performance in its end-of-fiscal-year results for 2022, with a total revenue increase of four percent, reaching $48.2 billion (€45.6 billion). This growth was driven by service revenue growth in Europe and Africa.

In summary, the Vodafone Group’s end-of-fiscal-year results for 2022 indicated a total revenue increase of 4 percent, amounting to $48.2 billion (€45.6 billion), driven by service revenue growth in Europe and Africa. The Group made a profit of $2.8 billion (€2.6 billion) for the financial year, which was primarily promoted by higher Adjusted EBITDA and lower income tax expense. Basic earnings per share were $0.078 (7.20 euro cents), compared to basic earnings per share of $0.0041 (0.38 euro cents) in the previous year.

Meanwhile, Vodafone Oman celebrated its first anniversary by reporting that it achieved 96 percent of its subscriber base goal of over 45,000, surpassing its original aim of capturing 5 percent of the Omani market by hooking 7 percent. Additionally, it achieved 109 percent of its EBITDA goal. The executives attribute these achievements to the My Vodafone App, which helped them gain a competitive edge and reach two million downloads.

The telco has decided to take a similar approach to Omantel in building loyalty and contributing to the upliftment of the community in an effort to top the Oman telecom industry. In fact, its efforts to improve Omani communities will have an impact on low-income families across the Sultanate. The company aims to reinforce its growing reputation as a socially responsible organization that aligns with Oman’s national agenda. To that end, Vodafone Oman has announced that it will partner with the Oman Food Bank (OFB) in early 2023. The agreement involves providing food supplies to low-income families across Oman, supporting Oman’s food security efforts, and raising awareness about the importance of food preservation.

Growing Potential

Oman has immense potential for investors, as Oman telecom industry continues to thrive despite its heavy reliance on oil. Moreover, the government has allocated a significant portion of its budget towards social and basic sectors, amounting to 38 percent of total public spending, or over $11.169 billion. Out of this, 44 percent has been dedicated to the education sector, which indicates that the government is committed to supporting local talent and nurturing the country’s future leaders. In addition to this investment in education, Oman’s tourism industry is also on the rise. The Omani Foreign Ministry has recently released a list of 103 countries whose citizens can enter the country visa-free for 14 days, including Norway, Croatia, Denmark, Ukraine, Ireland, France, Uruguay, Japan, South Africa, China, USA, and Canada.

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