2016 was an interesting year for the telecom sector in Oman. For almost a decade, conventional revenue streams like voice and messaging services were driving growth in this sector. 

However with increased competition from over-the-top services (OTT) things have changed. This year the revenues of Omani telcos were primarily driven by demand for data services while voice and SMS segments are showing declining trends. 

Last year, in an exclusive interview to BusinessToday, Talal bin Saeed bin Marhoon al Mamari, the CEO of Omantel, said that the telecom industry in Oman is in a phase where the growth of mobile broadband specifically in terms of contribution to revenue is higher than the decline of revenue from conventional services.

“I see a good demand for solution-based offerings and these will enhance the growth in the market and our strategy focuses on these opportunities. There is a growing demand for broadband services both in mobile and fixed lines. The fixed line broadband, in particular, has very low penetration and therefore it provides more opportunities for growth,” he said.

As mentioned above, the state-owned telco's group revenue for the first nine months of 2016 increased 4.3 per cent to RO399.8mn, compared with RO383.3mn for the same period of 2015. The group net profit rose by 4.8 per cent to RO95.1mn from RO90.8mn for the period under review.

“The growth is mainly driven by broadband revenues, by 15 per cent, and wholesale revenues, by 26 per cent. Conventional revenue streams such as voice and SMS have continued their declining trend due to over-the-top (OTT) services,” Omantel said in a report released to the Muscat Securities Market.

The company said the explosion of video services continues to be the key driver for a growing broadband market. “This year has already seen the global launch of Netflix and Omantel launched its own IPTV solutions, further driving broadband speed and bandwidth demand, both for mobile and fixed services,” he says.

Ooredoo’s revenues for the January-September period of 2016 grew 8.1 per cent to RO201.9mn, compared with RO186.8mn in the same period of 2015. Ooredoo's net profit grew by 16.4 per cent to RO37.6mn from RO32.3mn.

Jorgen Latte, acting CEO of Ooredoo Oman, said, ”In the last twelve months, demand for our mobile data has increased by 47.2 per cent and for our fixed services by 43.1 per cent. Our fixed customer base grew by 23.4 per cent and 84,000 homes can now enjoy fast and superfast fibre with speeds of up to 100Mbps. We are pleased with this growth, as well as the increase in our revenues; 2016 so far has been our best ever year.”

Customer base growth

Omantel said its total domestic subscriber base (including mobile and fixed businesses) stood at 3.33mn (excluding mobile resellers) as of September 2016, compared with 3.38mn a year earlier. Its total subscriber base including mobile resellers reached 4.45mn. On the other hand, Ooredoo Oman said its total customer base grew by 5.6 per cent to 2.92mn at the end of September 2016 compared with 2.77mn for the same period of 2015.

New players

In a move that could reduce the prices of telecom services and benefit the customers, the Telecommunications Regulatory Authority (TRA) in November announced the starting of the process to award a third licence for the installation, operation, maintenance and exploitation of a telecommunication system to provide public mobile telecommunications services. 

“The availability of a range of additional radio spectrum that could be deployed is expected to provide a multitude of mobile telecom services, particularly mobile broadband, to the consumers in the sultanate. TRA considers that the enhancement of competition in the mobile telecommunications services market will be of significant benefit to consumers and to the economy of the sultanate,” TRA said in a statement on its website.

The acquisition of Renna by Telecom Oman (TeO) this year is a significant development in this scenario. Darren Tong, CEO of TeO, said that the company's primary concern in 2016 was the re-entry into the mobile market, which they achieved through the 100 per cent acquisition of Renna. Now they are gearing up for the new telecom licence.

“We have also been preparing for the issuance of a third mobile network operator’s licence in 2016, and we are gratified to see very concrete steps being taken by the TRA,” he added.

Challenges

Like other sectors, the main challenge for telecom has been the economic realities of the last twelve months. Tong says, “2016 was a challenging year for the industry as a whole, given that the Oman economy is still oil driven.  Competition is increasing in the market, and I think smaller players saw pressures on their margins.”

Omantel noted that the continuous evolution of OTT players in the domains of voice, messaging and content put pressure on the capacity of telecom operators to continue their current levels of investment.

The company said a set of substantial changes in the regulatory framework (including the introduction of a third mobile network operator, the new Access & Interconnection Regulation and a new Telecom Law) which are expected to come into effect in 2017 will “alter the competitive force in the market”.

“Combined, these market dynamics will likely pose challenges for growth opportunities,” it added.

According to Latte further challenges this year have been to continue to meet the fast-evolving needs of the increasingly digital lifestyles of customers and their ever more sophisticated expectations. “For example, seeing that the sultanate’s shopping habits are migrating online, we launched the Ooredoo eShop, the first-of-its-kind online facility in Oman. Along similar lines, we introduced a range of user-friendly payment and recharge options online via credit card, with Facebook, and through the mobile banking apps and ATMs of the sultanate’s leading banks,” he added.

Going forward a set of substantial changes in the regulatory framework including the introduction of a third mobile network operator, the new access and interconnection regulation and the new telecom law are expected to come into effect in 2017. 

© businesstoday 2016