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Omani TRA Invites Firms to Submit Proposals for Second Fixed-Line and Third Mobile Licences
5 Mar 08
Oman's telecommunication regulatory authority (TRA) has announced that it will invite firms to submit proposals for a second fixed-line telecom licence and a third mobile phone licence as it liberalises its telecommunications sector.
Global Insight Perspective | | Significance | The licence offerings will break the fixed-line monopoly of Omantel and the duopoly between Nawras and Omantel. | Implications | Omantel will clearly suffer in the short term as it faces competition on two of its core services. | Outlook | Entry conditions for both new mobile and fixed-line services will be tough, although they should be easier than breaking into other countries in the Middle East going through liberalisation. |
The Omani TRA has given firms less than a month to express their interest in third mobile operator and second fixed-line operator licences, with a deadline being set for 1 April 2008. In Oman, fixed-line services are also provided by the incumbent, Omantel, which has a monopoly; it also provides mobile services in competition with Qtel-owned Nawras, which entered the mobile market in March 2005. Mobile penetration in Oman is approximately 85-90%, and Omantel has a market share of 60%, leaving Nawras with the remaining 40%. The outlook for mobile growth is in line with that of other Middle Eastern countries that have pushed the 100% mark (see Oman: 21 November 2007: Nawras Expects Mobile Penetration in Oman to Reach 100% by End-2008). A rise in mobile penetration will be dependant on the availability of mobile data services such as those offered on 3G and 3.5G networks. Countries such as the United Arab Emirates, which have very high mobile penetrations of around 170%, have succeeded via the use of these services compounded with the addition of a high number of tourists and business users. Incumbent Omantel is in the process of developing itself in order to make it more competitive among its international peers. It is also restructuring its board of directors to include representatives from the government with relevant experience in the telecommunications sector (see Oman: 6 February 2008: Omani Government to Sell Up to 30% in Omantel). The operator has also recently invested outside its domestic market in Pakistan to sustain its growth (see Pakistan: 19 February 2007: Omantel Acquires 60% of Pakistani Operator, Worldcall, for US$193 mil.) The announcement to offer a second fixed-line licence is a major blow to Omantel, which up until recently expected to keep its position within the sultanate (see Oman: 15 November 2007: Oman to Keep Fixed-Line Monopoly). The company recently announced that it would introduce VoIP services that will allow for cheaper voice calls compared to the current public switched telephone network (PSTN) levels (see Oman: 21 February 2007: Omantel to Launch VoIP Service in Oman). Outlook and Implications The sale of the two licences is in line with other countries in the Middle East, which are also opening up their telecoms sectors. Elsewhere in the region, Saudi Arabia is in the process of seeing its third mobile operator, Zain, deploy a network in the third quarter of this year and the Qatari regulator also announced that it is also planning to sell its second fixed-line licence in 2008. The regulator in Qatar recently sold a second mobile licence to a group led by Vodafone in December 2007. Whilst mobile penetration has not yet passed the 100% mark, as in many Gulf Cooperation Council (GCC) countries, the current mobile operators have deployed numerous value-added services over the 3G network, which has helped stimulate the market, leading to a high probability that mobile penetration would break the 100% barrier. At the end of 2007, Bahrain recorded a mobile penetration of 140% and has recently announced that it will auction a third mobile licence (see Bahrain: 27 February 2008: Bahraini Regulator Announces Third Mobile Licence). STC recently won the third mobile licence in Kuwait where mobile penetration is above 106%. From the current scenarios within the Middle East, a new third operator will face tough entry conditions, although other markets, such as Bahrain and Qatar, will be significantly harder to access. The winners of the both fixed-line and mobile licences are likely to partner with international investment institutions rather than take full 100% ownership. This has been the case with other operators entering Middle Eastern markets, even amongst cash-rich ones such as STC, which took a 26% stake in the third mobile operator in Kuwait (see Kuwait: 27 November 2007: STC Wins 26% Stake in Kuwait's Third Mobile Operator). Whilst mobile uptake massively exceeds that of fixed-line services, the new fixed-line operator will have to focus on broadband technologies such as triple-play, which offers the customer a one-stop-shop for all their domestic communication needs. In other Middle Eastern countries where mobile penetration is extremely high, considerable investment has gone into the development of broadband services, which have stimulated growth across the region.
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