Change of tack for Omantel sell-off

11 April 2003
The government has revised its plans to sell a stake in Oman Telecommunications Company (Omantel). In a major rethink, it has decided against selling the stake to a strategic investor as a result of the downturn in the global telecommunications market, and opted instead to float a 20 per cent stake in the monopoly on the Muscat Securities Market through an initial public offering (IPO). A further 10 per cent is expected to be placed with state pension funds (MEED 7:6:02; 5:4:02).

The IPO is expected to take place in the fourth quarter. The government is understood to be considering splitting the fixed- line side of the business from mobile services to stimulate investor interest in the operator. Plans to sell a 40 per cent stake in the operator were halted last year by a lack of interest among international investors. Merrill Lynchis advising the government on the privatisation.

The government took its first step to liberalising the local telecommunications sector by establishing last August an independent regulator. The Oman Telecommunications Regulatory Authority - which is a pre-requisite for opening up the sector to a second operator - will set tariffs and oversee the liberalisation of the sector, which is part of Muscat's commitment to the World Trade Organisation (MEED 30:8:02).

Omantel operates just over 200,000 fixed lines and has more than 320,000 pre-paid and post-paid customers for its GSM services. The company is actively investing in developing its fixed-line coverage and introducing new mobile technology such as general packet-switched radio services (GPRS) and 3G (third-generation) network coverage. In a bid to attract investors, the company reduced some of its tariffs by as much as 30 per cent in December (MEED 31:12:02).

International telecoms consultants have also been invited to bid by 5 May to advise Omantel on its enterprise transformation programme, which is intended to build the company into a world-class operator. The selected consultant will be required to recommend changes to the company's management and operating structure and put in place a new business model.

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