Muscat: Oman government has decided to raise royalty paid by telecommunication service providers to 12 per cent of revenues in 2017, from 7 per cent now.
The country’s market watchdog Capital Market Authority (CMA) has received a letter from Telecommunication Regulatory Authority (TRA) about the Council of Minister’s decision to revert royalty percentage on telecommunication operators to 12 per cent.
A severe drop in oil revenue has prompted the government to find alternative sources of revenue, through new levies and increase in existing taxes.
Although there was a serious discussion on raising telecom royalty in January 2016, the government did not take a decision at that point of time.
The majority state-owned Oman Telecommunications Company (Omantel) in a disclosure statement posted on MSM website said; “If the same increase had been applied for the first nine months of 2016, the effect on net profit would have been a reduction of OMR16 million.” Omantel group’s profit for the first nine months of 2016 grew by 4.8 per cent to OMR95.1 million.
Likewise, Omani Qatari Telecommunications Company (Ooredoo) said that if the same increase had been applied for the first nine months of 2016, the effect on net income would have been a reduction of OMR8.7 million or 23.3 per cent.
Ooredoo has achieved a 16.4 per cent growth in net profit at OMR37.6 million for the first nine months of 2016.
The Muscat Securities Market had suspended trading of both telecom shares on Thursday as the companies could not disclose the decision on royalty revision before the market started trading.
However, both companies have disclosed the information later in the day.