Sky is the limit
Ross Cormack, CEO, Nawras speaks about the forward approach and
growth plans of the company following the launch of its IPO.
Excerpts from a candid interview with Visvas Paul D Karra
Nawras is the first company in Oman to use a book-building
process for an IPO. How did you arrive at a fair price with this
When we sat with the Capital Market Authority (CMA) for our IPO,
they said the banks had recommended an improved process of price
setting and they actually had asked BankMuscat to study this
process over the last two years and they had concluded that the
time was ripe to introduce the book-building process. In
addition, we were glad to be part of this process as it is yet
The principle is that the process interrogates all the
professional investors who follow telecommunications in this
region. They are the experts who have paid to get the answers
right. They were asked en masse to tell how many shares they
would buy at different prices. This means that you can basically
draw a demand curve and since you know how many shares are
available and you have the demand curve, the place where they
intersect is the fair price for the institutions.
If it is a fair price for the institutions, how can you say
that it is a fair price for retail investors?
Well, the fact is that they (institutional investors) are
specialists at that business. Clearly some get it right more
than others but they are still fully informed as compared to
retail investors who can of course never be fully informed
because it is not their job. Therefore, they can rely on the
fact that the price, which is finally struck, is a price, which
should broadly meet the available demand with the available
supply, in other words a fair price.
Why did you choose the book-building approach for your IPO?
People are concerned about after-markets therefore book-building
helps in this. Firstly, because the equilibrium of the price
setting is so much better than other methods. There should be
relative stability going forward, all other things remaining
Secondly, because of the process, the institutions will look at
their appetite in a demand-curve way, which means that if they
see a difference in pricing as they go forward they are ready to
come in. So it creates stability. You are talking to the manager
of the company now. You may ask why we need a stable life. What
we are doing is looking after customers. Now if we lose that
focus, it is not a good way of spending our time. The virtuous
circle we have at the moment is that if we look after our
customers properly, they will use our service; if they use our
service, that drives our financials and that looks after the
shareholders. So we try to stay focussed. That’s why we like
stable markets. Now obviously, our challenge – one that we
gladly accept – is to try to grow that value over time. It is an
important point to remember that we are still talking about a
growth company; this is not just a dividend yield company. So,
if you look at Nawras it is something very special. You will be
a very satisfied receiver of dividends and you will also be
participating in a company that is growing. We think it is very
attractive and we are very excited by this opportunity.
How successful will Nawras IPO be in the prevailing weakened
I see success being defined as ‘happy sellers meet happy
buyers’. Then this is also a kind of an opportunity for us. At
the moment, people may have an opportunity to enjoy our services
or they may choose not to; but this IPO can now appeal to an
even wider group and we may attract people who are not our
customers to invest. Maybe we can get them to try our services
as well. We think it is a very good time to come into the market
from an operational point of view because we can really meet and
exceed the demands of the new shareholders and at the same time
attract new customers.
Shareholders will be curious to know the growth areas for
Nawras, knowing that you have geographical limitations for any
We see growth in a number of areas. By the way we don’t feel
geographically limited, as we have got over 300,000 sq mtrs of
land in Oman (laughs) itself. The growth that we see in
continuing the mobile business, with 140 per cent penetration,
is enormous if you just compare with the UAE, which has 230 per
cent, SIM card penetration. And we are seeing growth every day
with hundreds of customers being added everyday.
The other growth areas are largely new, making us very excited.
The first is in the business corporate market. In the past, we
had only mobile services but now we can go to the corporates and
ask if we can bring fibre to your business as we can provide all
types of services. And when we look at our corporate customers
in the eye, they look absolutely excited because there is an
unrequited demand for real latest fixed services and we have
some unique aspects to our product offerings in the fixed area.
This is why we have been able to attract some famous names like
Imtac, BankDhofar and Oman Air. That means we are already
showing the benefits of having that fixed portfolio.
Then there is growth in the international market. As we land our
international cable, it gives us the opportunity to take
benefits of the geography of Oman as a hub in the region. So we
can move other people’s traffic through our country on to other
countries. That is a very big business indeed by the way and
that is a new revenue stream for Nawras, which we didn’t have
before. Apart from that, being part of the Qtel group we have
the natural advantage of having a large number of sister
companies that would love to route and receive traffic through
our cable. So it’s a win win situation. We can be a hub in this
region for independent operators of the world and also for our
parent company. Domestic broadband is another area of growth.
That is relatively underserved. Even if it is as high as 10 or
15 per cent in Oman there is still a massive underserved
portion. That is a growth oppor-tunity. Because of the
international cable and international gateway, we can control
our costs much better and because of that we now have the
virtuous circle of having more opportunities to control costs
and also grow our revenues, which is obviously something, which
the shareholders will be very pleased to enjoy as that will
translate into more net profits.
Has there been a delay in the listing of the IPO?
No, there has been no delay. In terms of the license we are
supposed to launch around now.
Do you think that, with seven telecom operators in the
country, your marketshare will come down?
I think that if you look at what we have done well until now, I
don’t mean to do anything different now. We will focus on
customers. The virtuous circle is we get great people to work in
the company who are really enthusiastic about what they are
doing. So they look after the customers, and then we will have
customers who use more of our services. They will delight the
shareholders with increased revenues and profits. That is the
approach. Further, as far we are concerned, competition keeps us
on our toes. It means we get out of bed every morning delighted
because we are having a good focus on our customers.
How will the money that will be raised going to be utilised?
The money is not coming to the company. The money will just come
from a new group of shareholders to the selling shareholders.
One-for-one map. So it does not touch Nawras. We have got
sufficient funds for our operations. Usually people selling on
the stock markets are attracting funding for their operations,
whereas we have already got that. We are a growth company with
an excellent prospect of dividend yield with enough funding to
deliver that internally without any shareholder funding.
Nawras IPO – Quick Facts
Omani Qatari Telecommunications Company (under
transformation) trading under the name “Nawras”
Financial Year: Commences on January 1
and ends on December 31 each year
Authorised Share Capital: RO70mn, divided
into 700 million shares with a nominal value of
RO0.100 (Bzs 100) per Share.
Issued and paid up share capital: RO65,094,423
divided into 650,944,230 shares issued by the
company with a nominal value of OMR 0.100
(Bzs100) per share.
Number of Shares offered for subscription:
260,377,690 shares representing 40 per cent of
Nawras’ total share capital.
Price Range of Shares offered for subscription:
Price range of a minimum price of Bzs 702 per
Share (Floor Price) and the maximum price of Bzs
902 per Share (Cap Price).
Percentage of the total share capital on
Offer: 40 per cent of the issued and paid up
share capital of Nawras Selling Shareholders:
Investcom BSC’s 97,641,630 Shares,
representing 37.5 per cent of the Offer
Development LLC’s 91,132,190 Shares,
representing 35 per cent of the Offer Shares
Diwan of the
Royal Court Pension Fund’s 13,425,720
Shares, representing 5.16 per cent of the
Defence Pension Fund’s 22,376,210 Shares,
representing 8.6 per cent of the Offer
Pension Fund’s 22,376,210 Shares,
representing 8.6 per cent of the Offer
Security Service Pension Fund’s 8,950,490
Shares, representing 3.44 per cent of the
Special Force Pension Fund’s 4,475,240
shares, representing 1.7 per cent of the
Eligibility: The subscription will be open
to Omani and Non-Omani individuals and
- Category I Investors: 182,264,383 Shares,
being 70 per cent of the Offer, will be on a
proportionate basis - - Category II Investors:
78,113,287 Shares, being 30 per cent of the
Offer, will be on a proportionate basis Min.
Subscription Limit under one Application:
- Category I Investors: 500 Shares and in
multiples of 100 Shares thereafter
Category II Investors: 500,100 Shares and in
multiples of 100 thereafter
Max. Subscription Limit under one
- Category I Investors: 500,000 Shares
- Category II Investors: 26,037,700 Shares
which is 10 per cent of the Offer
Offer Opening Date: September 15, 2010
Offer Closing Date: October 14, 2010
Nominal value of the Shares: Bzs 100 per Share
Category I Investors: Should apply at cap
price (Bzs 902) with desired number of
shares. Offer price will be determined by
the book building process of Category II
- Category II Investors (Book Building): Can
place orders at any price within the price
range with desired number of shares, have
right to revise their order as well.
Sole Issue Manager: Bank Muscat SAOG
- Morgan Stanley & Co. International plc
- Bank Muscat SAOG
- Bank Muscat SAOG
National Bank Of Oman SAOG
Ahli Bank SAOG
- Oman Arab Bank SAOC
Proposed Time table:
Commencement of subscription - September 15,
- Closing of subscription - October 14, 2010
- Due date to receive subscription data -
October 23, 2010
- Offer price finalisation & allotment -
October 23, 2010
- CMA approval on proposed allotment -October
- Notice of allotment & refund -October 25,
- Share listing with MSM - October 27, 2010