Oman­tel’s net profit falls 39% to RO41mn

Muscat Daily - - BUSINESS -

Oman Telecom­mu­ni­ca­tions Co (Oman­tel) re­ported a 38.9 per cent de­cline in group net profit for the six months pe­riod ended June 30, 2017.

The com­pany posted a net profit of RO40.8mn for the first half of this year com­pared to RO66.8mn in the cor­re­spond­ing pe­riod of 2016, ac­cord­ing to Oman­tel’s ini­tial re­sults an­nounced at the Mus­cat Se­cu­ri­ties Mar­ket.

Oman­tel said the fall in its net profit is pre­dom­i­nantly at­trib­uted to the in­crease in roy­alty rates ef­fec­tive from Jan­uary 1, 2017. Roy­alty paid by the com­pany jumped by 70.8 per cent to RO29mn in the first half of this year against RO17mn in the same pe­riod of pre­vi­ous year. The in­crease in roy­alty ex­pense was RO12mn in 2017 com­pared to the cor­re­spond­ing pe­riod in 2016.

Oman­tel recorded group rev­enue at RO267.7mn in the first half of this year com­pared to RO270mn for the cor­re­spond­ing pe­riod in 2016, a mar­ginal de- crease of 0.8 per cent.

Oman­tel’s op­er­at­ing ex­penses rose 12.7 per cent to RO220.8mn in the first six months of 2017 from RO195.9mn in the same pe­riod of last year.

The com­pany re­ported a loss of RO2.3mn from dis­con­tin­ued op­er­a­tions in the six months pe­riod ended June 30 com­pared with a loss of RO2mn in the same pe­riod a year ago.

Net profit mar­gin fell to 15.2 per cent for the first half of 2017 from 24.7 per cent in the same pe­riod of last year.

EFG-Her­mes in a re­search note said that Oman­tel’s pre­lim- inary earn­ings for the sec­ond quar­ter of 2017 missed its es­ti­mates on weak mar­gins de­spite a sta­ble top-line. Ac­cord­ing to EFG-Her­mes, the com­pany’s sec­ond quar­ter earn­ings came at RO17mn, miss­ing its es­ti­mate by 17 per cent.

‘We note that Omani tele­com op­er­a­tors have been sub­jected to sub­stan­tial pres­sure fol­low­ing the in­crease in cor­po­rate tax rate to 15 per cent from 12 per cent start­ing 2017, as we all as an in­crease in roy­alty rates to 12 per cent from seven per cent as of 2017’, EFG-Her­mes said.

EFG-Her­mes said it ex­pects more head­winds from the up­com­ing in­tro­duc­tion of a third player in Oman’s tele­com mar­ket; the Telecom­mu­ni­ca­tions Reg­u­la­tory Au­thor­ity (TRA) has al­ready re­ceived bids in May from re­gional heavy­weights such Saudi Tele­com Co (STC), Eti­salat Group, and Zain Group.

‘The win­ning bid should be an­nounced in Septem­ber 2017. The en­try of a third player in a highly-pen­e­trated mar­ket such as Oman is likely to usher ag­gres­sive price-based com­pe­ti­tion’, EFG-Her­mes added.

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