Revenue and Management Discussion

Topics: Revenue, Generally Accepted Accounting Principles, Balance sheet Pages: 16 (4404 words) Published: April 13, 2013

Management Discussion & Analysis Report – Year Ended 31st December 2007 The management of Oman Telecommunications Company SAOG (Omantel) is pleased to present to the shareholders of the Company, a detailed report covering analysis on industry structure and development, opportunities and threats, future outlook, risks and concerns, detailed analysis on operational performance and other major activities of the year 2007. BRIEF HISTORY: Omantel is the leading telecom operator in the Sultanate providing Fixed, Mobile and Internet services to corporate, government and residential customers. The company was established in 1980 pursuant to Law No. 43 of 1980 as the General Telecommunications Organization (GTO), and has been a monopoly provider of telecommunications services since then. In view of emerging competition in the mobile market, Omantel Group established Oman Mobile in 2004, as a subsidiary company. Omantel became a publicly listed company in the year 2005 and its shares were listed on July 28th, 2005 in the Muscat Securities Market (MSM). Omantel is currently owned 70% by the government and 30 % by private investors. The sector competition began in March 2005 and the mobile segment was the first one to open up for competition. INDUSTRY STRUCTURE & DEVELOPMENT: Omantel’s main operations are within the telecom market in Oman. The government started implementing the sector liberalization in line with World Trade Organization (WTO) agreement. Beginning March 2005, the industry witnessed competition in the mobile sector through the licensing of a 2nd mobile operator. Currently, two mobile operators have been licensed. The sector liberalization process which began in the Sultanate in year 2005 has gained further momentum in year 2007 with the signing of Free Trade Agreement with United States of America. Telecommunication Regulatory Authority (TRA) has already requested applications from interested parties for the “Resale of mobile calls offered by the country's two mobile operators through pre-paid cards”. Also, following the TRA directive, Omantel has submitted the Reference Access offer (RAO) as part of the market liberalization of Internet and Value Added services. This is currently under review by the TRA. In addition to the above, TRA issued series of consultation papers / documents soliciting operator (s) and public opinion on: 1) Resale of International Calls. 2) Consultation on Quality of Standards (QoS) framework and Network Standards. 3) Rules and Procedures for Class III License Application. As part of improving the competitiveness, Omantel has started the implementation of the “Competitive Readiness Program” (CRP). The Phase I is completed and Phase II is expected to start soon. With this program, Omantel would undergo major transformations to fully prepare for competition. CRP outlines key elements of Omantel Group strategy and structure for the years to come. Also, Omantel is working closely with the Ministry of Finance (MoF) on the partial sale of Omantel shares to the Strategic Investor. Management Discussion And Analysis_2007_final/PE Page 1 of 12


OPPORTUNITIES AND THREATS: With Fixed Business services set to open up for competition in year 2008, the telecom market in Oman would undergo further dynamic changes in telecom service offerings. New Internet and other Value Added service providers are expected to enter the market soon. This would provide the market with numerous differentiated service offerings that are not available at present. We realize that there are still opportunities to increase customer base and penetration levels in Oman. As the leading telecommunication service provider in Oman, Omantel Group is strongly placed not only to compete with newcomers in the fixed line business segment, but also to benefit from the same through providing wholesale services to new telecom operators, which would position Omantel as “carrier of carriers”. This is due to strong national...
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