The Omantel CEO emphasized that the sale is critical for achieving the Company’s investment and cost efficiency targets, especially with respect to improving its balance sheet position through prepayment of existing borrowings which will further lead to reduced financial charges going forward.
Detailing the schematics of the agreement, Al Mamari said Omantel will sell 2890 towers in the Sultanate to Helios Towers for a cash consideration of US$575 million, an amount which has made the transaction among the highest in valuation in the emerging markets in recent years.
Under a long-term master services agreement, Omantel will continue to utilize the tower assets for a period of 15 years with renewal options., he added. On its part, Helios Towers has committed to build a minimum of an additional 300 new towers over the next 7 years.
Al Mamari emphasized that Omantel will retain full ownership and control of its active network and spectrum as well as its software, technology and intellectual property with respect to managing its networks, adding that the deal assumes significance for Omantel as telecom business models globally are evolving towards new sources of competitive advantage and differentiation requiring strategic and transformative moves.
Against a service fee to Helios Towers, Omantel will eliminate certain direct network operating costs and through the build-to-suit arrangement avoid passive infrastructure capital expenditure for new sites.
This strategic partnership has invited Foreign Direct Investment (FDI) in Oman, supporting Oman as a leading FDI destination in the GCC, while creating jobs and opportunities in the country, he said.
Through this agreement, Omantel has fulfilled five main objectives, which Al Mamari listed as: Reducing leverage and raising capital to fund network upgrade, accelerating network deployment, improving cost structure, focusing on core business, and following international best practice.
Elaborating on this, the CEO stated that the capital released through this sale will be redirected towards strengthening the Company’s balance sheet and investment in new technologies and new products and services, which will be seen in the form of higher network capacity, and faster rollout to rural areas to bridge the digital divide. This strategic partnership with Helios Towers has invited substantial Foreign Direct Investment (FDI) in Oman creating jobs and opportunities while cementing the Sultanate’s reputation as a business-friendly nation.
Underscoring the agreement’s positive impact on KPIs, Al Mamari said that Omantel will receive cash proceeds of the sale against payment of service and lease charges, while Helios Towers will bear the direct operating cost of the passive infrastructure, including electricity, fuel, operations and maintenance, depreciation, ground rent and other costs.
Omantel CEO said the transaction is expected to have a neutral to positive impact on the Company’s net profit and that it is expected to be “Credit Positive” as it will result in reduction in leverage. The net debt to EBITDA is expected to fall from 3.2x to below 3x, while leverage is further targeted to fall to c. 2.3x by 2024.
The transaction is subject to conditions precedent, including, inter-alia, the approval of Telecommunications Regulatory Authority of Oman and other statutory authorities in Oman, as may be applicable. Al Mamari told the audience that the transaction is expected to conclude in the second half of 2021.
Muna Al Mamari
Manager Press & Media
Tel: +968 24242743
© Press Release 2021