Oman telco Nawras to reduce capital spend and costs

Oman telco Nawras to reduce capital spend and costs

Capital expenditure to fall from 2012 as network built out; Q3 net profit 13.5 mln rials vs 12.5 mln rials a year ago; Subscriber numbers fall 3.6 pct year-on-year

October 27, 2011 2:04 by Reuters

Oman’s Nawras , which reported an 8 percent rise in third-quarter profit on Wednesday, plans to lower spending from 2012 and cut costs, the telecoms firm’s chief financial officer said.

The operator, which is majority owned by Qatar Telecommunications Co (Qtel) and launched services in 2005, will invest 140 million rials ($364.6 million) in its fixed and mobile networks in 2010 to 2011.

“Next year and the years after that, the level of investment will be much lower because we have more or less rolled out the entire network,” Jorgen Latte told Reuters.

“We will keep our borrowing at current levels of 66 million rials, but we will refinance to have a more flexible structure of our debt facility.

“There’s no need to borrow extra funds because our operations are generating enough cash for investments.”

Nawras’s third-quarter net profit rose 8 percent to 13.5 million rials as mobile data usage increased to offset falling subscriber numbers. This compares with a profit of 12.5 million rials in the same period a year ago.

One analyst who spoke to Reuters forecast the operator would post a quarterly profit of 10.6 million rials.

“People are finding new ways of using broadband data,” said Nawras chief executive Ross Cormack. “Smart phones are a major growth area and we’ve put in place packages to target particular market segments, meaning we’ve got something for most people.”

Home and business broadband customers have more than doubled from the second quarter, he added.

Revenues rose to 49.2 million rials in the third quarter from 47.7 million rials a year earlier.

“We’ve run a tight ship when it comes to costs and have launched an efficiency programme to cut operational expenditure,” said Latte, adding the operator had also reversed 1.16 million rials of provisions it had previously taken.

Some of these were to cover unpaid customer bills that have now been settled.

The firm had 1.95 million fixed and mobile subscribers at September-end, down 3.6 percent from a year earlier. It said this was “primarily due to regulatory changes in the rules for counting the customer base”.

Nawras has an estimated 40 percent share of Oman’s mobile revenues.

Net profit for the nine months to Sept.30 was 35.6 million rials, down from 38 million rials in the same period of 2010.

“Net profit was affected by higher depreciation and amortisation charges relating to the build-out of the fixed and mobile networks,” Nawras said.

The firm’s shares, which listed on the Oman bourse in November 2010, closed 0.2 percent higher before the results were announced. ($1 = 0.385 Omani Rials) (Reporting by Matt Smith; Editing by Praveen Menon and Will Waterman)