Muscat: A cash dividend of 70 per cent has been proposed by the board of the Oman Telecommunications Company (Omantel), which is subject to an approval from the shareholders at their annual general meeting scheduled on March 30, 2017.
This is in addition to the interim dividend distributed in August 2016, amounting to 40 baisas per share. Accordingly, the total dividend amounts to 110 per cent of the company’s paid up capital, equivalent to 110 baisas per share for 2016, according to a disclosure statement.
The board also proposed to the annual general meeting to authorise the board of directors to distribute interim dividend in the month of August 2017 to the extent of 30 per cent of the paid up share capital.
The Omantel group’s net profit for 2016 was OMR116.7 million, compared to OMR48.5 million in 2015. The net profit in 2015 included a one-off charge with respect to the impairment of investment in Worldcall Telecommunication Limited (WTL). If the results of WTL are excluded, the group’s net profit for 2016 would have been OMR117.7mn, compared to OMR115.4 million in 2015.
The group achieved a 3.2 per cent growth in total revenue at OMR523.6 million in 2016, against OMR507.3 million for the previous year.
The Omantel group’s operating expenses in 2016 were OMR396.1 million, against OMR372 million for the previous year.
“Besides the extensive competition, we grew our customer base by 2.5 per cent, especially in re-sellers, data and internet segments. As of December 31, 2016, Omantel’s domestic customer base stood at 3.35 million (4.52 million including resellers) as against a total customer base of 3.38 million (4.41 million including resellers) in 2015. Our resellers grew by 14.3 per cent and closed at 1.17 million customers on December 31, 2016,” Omantel said in its management and analysis report.
Also, Omantel stood out as one of the prominent and most competitive wholesale telecommunication provider in the Middle Eastern region. “We are one of the leading companies in the field of submarine cable networks, and a key participant in several submarine cables, complemented by direct terrestrial links, connecting Asia, Europe and America passing through Oman. We have 13 international submarine cable landings through Omantel in the Sultanate, making Oman one of the attractive international hubs in the region. Our submarine cable portfolio has grown to nearly 20 submarine cable systems around the world.”
Recently, the government has increased royalty from 7 per cent to 12 per cent on gross revenue, which is estimated at 17 per cent of the net profit for 2016. This is in addition to the increase in corporate tax from 12 per cent to 15 per cent. All of it is expected to result in a negative impact on Omantel’s net profitability in 2017.
A new fixed broadband operator rolled out its services in Muscat from the second quarter of 2016, exerting a new competitive pressure on Omantel’s premier FBB service. This development is expected to further intensify the competition during 2017 and Omantel may witness a less than expected uptake of its fixed broadband services.
Further, the same operator has also been permitted to roll out its fixed and international telephony services. Going forward, this will impact Omantel’s international calling revenues.