Kippreport investigates if oil prices aren’t the only cause for the market slumpAugust 27, 2015 12:00
Omani telco Nawras pins hopes on fixed, broadband
Nawras CEO Ross Cormack talks about combating dropping mobile subscriber numbers and focusing on broadband technology to drive growth.
May 11, 2011 5:13 by Reuters
Nawras, Qatar Telecom’s (Qtel) Oman unit, is targeting fixed and mobile broadband to drive earnings growth as mobile subscriber numbers decline, its chief executive said.
Nawras, which has a 42 percent share of Oman’s mobile market and a similar share of revenue, last month reported a 13.6 percent drop in first-quarter profit.
Increased capital and operational expenditure — Nawras will spend 140 million rials on capital expenditure for 2010 to 2011 — was the main cause of this drop, Nawras chief executive Ross Cormack told Reuters in an interview, although mobile subscribers are also in retreat.
Nawras had 1.93 million mobile subscribers in the first quarter, down 4.5 percent from the fourth quarter of 2010, while ARPU (average revenue per user) dropped 3.8 percent.
Mobile penetration in Oman was 140 percent by the end of 2009, according to data from the International Telecommunications Union, the most recent available.
With the mobile voice market stagnating, fixed and mobile broadband will drive Nawras’ growth, Cormack said, while service level agreements (SLA) — guaranteeing a certain level of bandwidth — with corporate clients will also become increasingly important.
“About 10 percent of Oman’s 30,000 businesses are of sufficient scale to potentially require an SLA and, in time, SLA will become a significant part of our business,” said Cormack.
Fixed broadband penetration in Oman was less than 2 percent in 2009, but mobile broadband penetration was 43 percent, according to ITU.
Broadband uses much more bandwidth than voice, so rising demand for data requires increased infrastructure investment, eroding margins.
“Margins are under pressure and we constantly re-examine our costs, but if you get it right the first time you have a lower cost base,” said Cormack.
Nawras has a network roaming agreement with former monopoly Omantel that covers less than 1 percent of Oman’s population, but Cormack does not foresee following the trend in other markets to sell tower infrastructure to a third party, becoming a tenant to cut maintenance costs.
“It’s too early to get into that,” he added. (Reporting by Matt Smith; Editing by Elaine Hardcastle)