By Matt Smith
DUBAI, Sept 29 (Reuters) - A proposal to raise taxes on Oman's telecoms companies to help to pay for the country's budget deficit will put future investment in the industry at risk, the chief executive of the sultanate's second-biggest mobile network operator Ooredoo Oman said on Tuesday.
Last November, Oman's Shura Council, which advises the government, suggested reforms to boost Oman's non-oil tax income, including a 12 percent royalty on telecoms operators' revenues.
"That's of significant concern to us because it's a direct hit to our profitability," Greg Young, Ooredoo Oman chief executive told Reuters on the sidelines of a conference in Dubai. "There's a direct linkage between our profitability and our ability to continue to invest," he said.
"Our view is that change is necessary at the company taxation level and should be applied universally across all sectors, rather than something specifically aimed at the telecom sector."
Oman posted a budget deficit of 1.50 billion rials ($3.90 billion) in the first five months of this year, swinging from a 232.9 million rial surplus a year earlier because of lower oil export prices.
Ooredoo Oman, majority-owned by Qatar's Ooredoo, and former monopoly Oman Telecommunications (Omantel) pay 7 percent of their gross revenue in royalties - or tax - plus 12 percent of profits in corporation tax.
The company's capital expenditure to revenue ratio was 34 percent in 2014, which compares with a global average for operators of about 17 percent in 2014-19, according to IT and telecoms analysts Ovum.
Young said his firm could spend so heavily because of current tax rates. But he said Ooredoo Oman's ratio would likely fall to 30 percent this year and to below 30 percent in 2016 as some of its long-term projects near completion.
($1 = 0.3850 Omani rials)
(Reporting by Matt Smith. Editing by Jane Merriman) ((matt.smith1@thomsonreuters.com; 00971506354039; Reuters Messaging: matt.smith1.thomsonreuters.com@reuters.net))
DUBAI, Sept 29 (Reuters) - A proposal to raise taxes on Oman's telecoms companies to help to pay for the country's budget deficit will put future investment in the industry at risk, the chief executive of the sultanate's second-biggest mobile network operator Ooredoo Oman said on Tuesday.
Last November, Oman's Shura Council, which advises the government, suggested reforms to boost Oman's non-oil tax income, including a 12 percent royalty on telecoms operators' revenues.
"That's of significant concern to us because it's a direct hit to our profitability," Greg Young, Ooredoo Oman chief executive told Reuters on the sidelines of a conference in Dubai. "There's a direct linkage between our profitability and our ability to continue to invest," he said.
"Our view is that change is necessary at the company taxation level and should be applied universally across all sectors, rather than something specifically aimed at the telecom sector."
Oman posted a budget deficit of 1.50 billion rials ($3.90 billion) in the first five months of this year, swinging from a 232.9 million rial surplus a year earlier because of lower oil export prices.
Ooredoo Oman, majority-owned by Qatar's Ooredoo, and former monopoly Oman Telecommunications (Omantel) pay 7 percent of their gross revenue in royalties - or tax - plus 12 percent of profits in corporation tax.
The company's capital expenditure to revenue ratio was 34 percent in 2014, which compares with a global average for operators of about 17 percent in 2014-19, according to IT and telecoms analysts Ovum.
Young said his firm could spend so heavily because of current tax rates. But he said Ooredoo Oman's ratio would likely fall to 30 percent this year and to below 30 percent in 2016 as some of its long-term projects near completion.
($1 = 0.3850 Omani rials)
(Reporting by Matt Smith. Editing by Jane Merriman) ((matt.smith1@thomsonreuters.com; 00971506354039; Reuters Messaging: matt.smith1.thomsonreuters.com@reuters.net))
