Oman kicked off its planned sale of 25 percent in Oman Telecommunications Co on Monday, inviting investors in a deal it hopes will boost the state-controlled firm's competitiveness as it expands abroad.
The government, which owns 70 percent of Omantel, wants to "strengthen Omantel's market position" through a stake sale this year, and could give an investor voting rights in the firm, the Ministry of Finance said in a statement on the bourse website. Governments across the world's biggest oil-exporting region are opening up their telecom sectors to competition as their economies surge on a seven-fold rise in oil prices since 2002.
Shares of Omantel - the Arab region's best-performing telecom stock this year - gained more than 2 percent on the plan, which will dilute the state's holding to less than half. The stake would be worth $1.15 billion at current market prices.
"Scale has become one of the main requirements for regional telecom operators to compete successfully," said Jithesh Gopi, head of research at Bahrain-based SICO investment bank.
"It becomes increasingly difficult for smaller operators like Omantel to compete in these markets. When you have a strong strategic partner who has deep pockets and scale, upgrading technology and investing in the local market becomes easier."
Oman will accept expressions of interest until July 18 from telecom firms that operate in multiple countries, have at least five million subscribers and agree to hold the Omantel stake for at least five years, the Ministry of Finance said. "It is difficult to play solo in this era of globalisation," said Amer Awadh al-Rawas, managing director of Omantel's mobile phone division, Oman Mobile.
"A strategic partner will increase our business ... penetration level is low, so there is lots of scope," he said. Citigroup Global Markets Ltd and National Bank of Oman are advising the government on the sale, which should be concluded by the end of 2008, the ministry said.
In Oman, home to 2.5 million people, mobile phone penetration of 96 percent last year was the lowest in the Gulf, according to ministry estimates, where the quota often exceeds 100 percent because people frequently own more than one phone.