:: OER - August

IN THE NEWS

Government plans to sell 25pc stake in Omantel
The government has made plans to sell 25 per cent stake in Omantel (Oman Telecommunications Company) by the end of this year and has sought expression of interest from qualified strategic investors. Currently 70 per cent of Omantel is owned by the government and the rest is traded on the MSM. Once the 25 per cent sale takes place, government ownership will fall to 45 per cent. The investor should have operations in multiple countries and at least 5 million active subscribers of which a minimum of 2 million in one market.

Apart from investment, the strategic investor is expected to contribute with management, technology and strategic planning at Omantel. The purpose of the sale is to make Omantel a worldclass service provider both inside and outside the Sultanate. As part of the sale process, the bidders will first submit a technical proposal on their experience and credentials and a financial proposal on what they would be willing to pay, said a company spokesperson. In conjunction with the sale, the government may also consider providing the strategic investor with certain rights enabling it to increase its economic and voting exposure to Omantel in future.

Citigroup Global Markets Limited is the lead adviser and National Bank of Oman is the local adviser for the sale. Omantel is the sole fixed line service provider in Oman with 270,000 subscribers in 2007 and the market leader in mobile communications with 1.49m subscribers, representing 60 per cent market share in 2007.

It acquired a 65 per cent stake in Pakistan’s Worldcall in February 2008.

Exploring possibilities
The government acting through the ministry of finance has announced its plans of exploring the partial sale of its shareholding in Oman Telecommunications Co (Omantel). H E Darwish Ismail Al Balushi, Secretary General, Ministry of Finance speaks exclusively to OER about the process.

How was the 25 per cent figure for a stake sale arrived at?
HE Balushi: We thought that 25 per cent is adequate and proper to encourage the investor as we felt that anything less than that would not be attractive to investors. The government feels that the disinvestment has to be done gradually. So as a first step, a 30 per cent stake was sold and now we are divesting 25 per cent stake bringing down the government’s share to 45 per cent. It is likely that an investor may look for a 25 per cent plus stake, but they will also look at the market in which they are going into and the state of a company and the services that it offers. We will see the value that the foreign stake holder brings in and if there is a need we are open to the idea of looking at the other requirements of a stakeholder.

Omantel is undergoing a merger process with Oman Mobile; is this a good time to bring in a new partner?
HE Balushi: This is one of the reasons why we are starting the stake sale process now. This is part of a package of procedures approved by the government. The decision was driven by the internal preparations like the integration and the composition of the new board of directors that was going on. Omantel on its part is in an advanced stage of completing this process.

Will there be a clash of cultures between the new private player and Omantel which is a government company?
HE Balushi: Omantel has transformed itself from being a company with a public sector ethos (mentality of a government run company) to a culture that is closer to the private sector. This culture has contributed to bringing in new standards of corporate governance and a better HR culture. Omantel’s efficiency is reflected in its profitability and share price. I see no clash in cultures between Omantel and the new player. On the contrary there are going to be complementary strengths that both can draw upon.

Omantel has taken a stake in Pakistan’s Worldcall. Will the telecom company look at more such opportunities in future?
HE Balushi: I don’t see any reason why it should not; every other telecom company is looking at gaining a global footprint. It is an industry in which people come and compete with you on home ground so a local company can go abroad and compete with them. Omantel has the strength and experience to go international. The strategic partner will help and support it in exploring these opportunities.

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August - 2008

Cover Story

Rockstars of MSM
OER-Gulf Baader Capital Markets present a survey of the Top 10 stocks which have given the highest shareholder returns over the last three years

Other Headlines

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Friendi’s friendly services
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Various financial schemes offered by auto finance companies translate into easy monthly installments for the car buyer. This has fuelled the proliferation of cars on Oman’s roads

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Fighting the inflation hydra
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