Omantel faces the classic dilemma of a former state champion facing increased competition in its domestic market, although with a few advantages over similar operators in other markets experiencing weaker economic growth. The firm is being forced to cut its margins in order to remain competitive, while improving its customer service and the quality of its offerings.

However, Omantel is still majority state-owned and is a key part of the sultanate’s economy. This means it will enjoy considerable shareholder support for the foreseeable future. As the most established operator, it managed to remain profitable during the economic crisis.

Omantel’s biggest challenge will be finding new sources of revenues as the home market becomes more competitive and saturated. Mobile phone penetration is currently 125 per cent in Oman and analysts say that unless economic growth returns to pre-crisis levels, demand will slow.

The WorldCall purchase was an attempt at diversifying Omantel’s revenue streams and could yet prove to be a wise move. Telecoms operators are increasingly looking to developing markets for new business. However, WorldCall remains focused on fixed lines and pre-paid cards, while mobile and data services offer cheaper alternatives.

The lack of 3G spectrum on offer in Oman will also be a severe constraint to the company’s growth in coming years, although it will also serve to limit the potential for expansion of Omantel’s rivals.