Omantel is MENA’S 3rd largest telecom group in wake of Zain stake purchase

NEW TRENDS: Network Function Virtualisation (NFV) being weighed as a stepping stone to 5G mobile technology

The acquisition of a 21.9 per cent shareholding in Kuwait-headquartered regional mobile telecom group Zain, has propelled Omantel Group, the Sultanate’s largest integrated telecom services provider, into the rankings of the largest telecom groups in the Middle East and North Africa (MENA) region.

Omantel announced in its newly published Management Discussion & Analysis (MDA) report, accompanying the Group’s financial report for fiscal 2017, that it has become the third largest telecoms group in the region, serving 10 markets, and with a total of over 51 million customers.

“The acquisition will enable Omantel to emerge as a new digital powerhouse in the region, which will contribute in driving our digitisation strategy to success. This deal is expected to yield long term economic benefits to our shareholders and government, as our expectations on intra-group synergies in both retail and wholesale segments begin to materialise,” the report said.

Last November, Omantel completed the acquisition of a 21.9 per cent stake in Zain for a total consideration of RO 845 million ($1.19 billion). Following the move, Omantel Group became the second largest shareholder in Zain, acquiring control of its Board as well.

The acquisition, financed through a combination of long-term and bridge loan facilities, is now proposed to be replaced through long-term capital market instruments, according to Omantel. To this end, an Extra-ordinary General Meeting convened by the company along with its AGM, will seek shareholder approval for a proposal to issue a guarantee for the issuance of a Us-denominated bond not exceeding $2 billion in the international capital markets by a subsidiary of Omantel.

The proceeds of these bonds will be used to replace the abridged loan facilities obtained by Omantel to acquire the stake in Zain Group, the company revealed last week.

Furthermore, in an effort to stay abreast of new telecom technologies and trends, Omantel says it is weighing the implementation of Network Function Virtualization (NFV) functionality in order to be suitably geared when fifth generation (5G) mobile technology becomes a reality in the Sultanate.

NFV, along with Software Defined Networking (SND), are open, software-based substitutes that operators around the world are embracing as they make the shift from proprietary hardware-based solutions.

“This will allow (the operators) to manage networks more efficiently, and be more responsive to changes in consumer preferences, while reducing dependence on physical hardware. Omantel is currently considering implementation of NFV functionality in order to prepare for the 5G network deployment going forward,” said the majority stateowned group in its MDA report.

Fifth generation mobile technology, according to Omantel, is rapidly gaining popularity even as operators struggle to fully recover their investments in 4G networks.

Oman Investment Fund (OIF), the sovereign wealth fund of the Sultanate of Oman, owns the government’s 51 per cent stake in Omantel.