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Oman 2018 | TELECOMS & IT | INTERVIEW

TBY talks to Talal Said Marhoon Al Mamari, CEO of Omantel, on the entrance of a third operator, the role of MVNOs, and objectives for 2018.

Talal Said Marhoon Al Mamari
BIOGRAPHY
Talal Said Marhoon Al Mamari has been the CEO of Omantel since 2014. He has 24 years of experience at Omantel. Prior to being CEO, he was the CFO. He sits on the board of directors of several companies, including Zain Group, Oman Corporate Governance & Sustainability Centre, and Al Amal Fund. He has a degree in business administration from Duquesne University, Pittsburgh.

Your YoY net profit as of September 2017 was OMR65 million. What led to these results?

The results you have seen are from the first nine months of 2017 and they reflect a changing environment in the market, specifically relating to the telecoms sector. The revenues from the first nine months were almost stagnant and there was no major growth; this reflects impacts coming from the macroeconomic environment. The impact of low oil prices has also impacted the spending powers at the enterprise and the consumer level. The other change was reflected in the form of responses from the government, specifically relating to the current oil price syndrome; this imposed as part of the solution from a physical point of view. Further royalties are a form of taxes that are applied on our revenues directly, as well as an increase in tax. Combining the increase in royalties from 7 to 12% and the increase in tax from 12 to 15%, the effective tax rate on our company is approximately 51%, which is among the highest compared to other corporate organizations that work in the country. Because of active CAPEX spending during the last three years, our CAPEX revenue has almost touched 30%, which is one of the highest not only in the region, but also globally when compared; the industry average is around 16%.

How will the TRA's decision to add a third operator license impact the Omani telecoms market, and how will Omantel react to this in terms of local prices?

We are ready to welcome the entry of a third operator. In regard to price competition, there is potential for a price war. In the short term this will provide better prices for the consumer. However, we believe that the investment power of the entire sector of all the operators will be impacted as well. Investments will be impacted by the entry of the third operator to increase their taxes and royalties, and therefore unfortunately at the expense of quality. Quality and price go hand in hand. As far as our operation is concerned, Omantel has dealt with competition since 2004. Today the market is basically split, more than 15.5% for the MVNOs, which are usually the natural space that a third operator takes. There is almost a 50-50 split between Omantel and Ooredoo; technically speaking a fourth entrant could join. So as far as strategy is concerned, it will be important for Omantel to focus on its Omantel 3.0 Strategy. One of the most important pillars is to exceed customer expectations. We will continue to invest in improving and enhancing our customer experience. The second pillar is associated with innovation; it will be important that there is innovation in solutions that are provided in the market, and personalization of services that are provided alongside to the consumers. The third pillar relates to transformation; it is important that the model optimizes cost as much as possible, while maintaining the level of quality and service based on the expectation of the customers.

How have the higher and lower segments both affected the telecoms market here in Oman, and what role do you see the MVNOs playing?

The current structure you mentioned with two MNOs and two active mobile resellers provides choices to consumers. The premium operators and services, such as ourselves, will focus on various segments of the market; we will continue to hold the premium side of the market. The lower end of the market has traditionally gone to the MRs, but the overall impact is providing a choice to the consumer space within Oman, and operators offering design to tackle different segments of the market. The entry of the third MNO will definitely have an impact on price and price competition. This price pressure is not new in the sector, and in fact the price antics of telecoms has been declining over the last five years. This will only add to that decline, but there are short-term gains from a market consumer perspective. In addition, there are also long-term losses, mainly associated with quality.

What main objectives does Omantel have for 2018?

We will continue to focus on our Omantel 3.0 Strategy. There are four pillars we would like to focus on, these being exceeding customer expectation, leading the digital transformation of the Sultanate, innovating our services, and transforming into an agile Omantel. We think that the relevance of our strategy will continue to be there for at least the next two years. We have taken our first step toward providing a total ICT solution through the creation of Momkin (Omantel IoT arm), the introduction of our ICT unit, and leveraging the ecosystem of Oman Data Park (ODP) with both Momkin and ICT to provide to enterprise and government.