MSX 30 Index closed the week higher by 0.64%

MUSCAT: MSX 30 Index closed the week higher by 0.64% week-on-week (w-o-w), despite selling pressure from non-Omanis. Omani Investors were net buyers of $4.0 million worth of securities on the bourse during the week.

The Industrial Index closed higher by 1.0% w-o-w while the Financial Index also closed higher by 0.83% w-o-w. The Services Index, however, closed down by 0.64% w-o-w. The MSX Shariah Index gained 1.04% w-o-w.

Oman Telecommunications Company has invited holders of its two series of notes for a cash tender offer: (1) $900 million, 6.625% Secured Notes due April 2028 and the (2) USD 600mn, 5.625% Secured Notes due October 2023. The company has said that it will redeem these notes for cash offer up to $600 million only. It must be noted that: The 2023 and 2028 notes are issued by Oztel Holdings and guaranteed by Oman Telecommunications. The Offers commenced Oct 4 and will end at 11:59 p.m., New York time, on Nov 1, unless extended, re-opened, and/or terminated Kroll Issuer Services is tender and information agent for the purposes of the offers.

We believe that this move is positive for Omantel. This is because Omantel’s net debt at 1H22-end stood at $5.44 billion, with the said notes contributing 26% to total net debt, while the maximum redeemable amount of $600 million constitutes 11% of the company’s outstanding net debt at 1H22-end. This implies that the company’s net debt position will improve, along with reduction in its USD funding exposure in a rising interest rate environment.

Further, the company’s cash flows will improve as interest payments will reduce (Cash Interest payment @3.9% on total debt during FY21, while the simple average interest on said notes is about 6.1%). This will result in an improved ability to continue paying similar dividends as over the last few years or even increase them going forward.

Recently, Omantel also announced that the company and Helios towers plc are continuing to work to satisfy the outstanding conditions for the sale and leaseback transaction of Omantel’s tower business. The two parties have agreed to extend the long-stop date for the sale from Sep 30, 2022 to Nov 11, 2022.

Sale of telecom towers in Oman and other geographies where Omantel has a presence through its Zain telecom subsidiary, will culminate in the establishment of one of the largest telecom tower companies in the region. This initiative was first launched in 2021 with the sale of thousands of its telecom towers in the Sultanate of Oman – has since been expanded to cover Zain-linked infrastructure in Saudi Arabia, Jordan and Kuwait, and will be expanded to include Zain towers in Bahrain, Iraq and 6 in Sudan as well. Significantly, the exercise will unlock an estimated $1.6 billion in value, which will be ploughed into Omantel’s long-term growth projects.

Latest data from NCSI Oman shows that Oman’s consumption of natural gas increased by 11% YoY in August 2022 compared to the same period of last year. Total production of natural gas increased to 4.783 million cubic meters in August 2022 against 4.304 million cubic meters in the corresponding period of 2021.

Vale in Oman, a joint venture of Brazilian-based global mining giant Vale and OQ, says its mega iron ore pelletising plant in Sohar Port has so far invested around $1.2 billion in the local supply chain as part of its commitment to in-country value (ICV) development. This figure, according to a high-level official, represents the aggregate of investments made by Vale in Oman into the localisation of its supply chain since it commenced operations in Suhar just over a decade ago in April 2011. The Rio de Janeiro-headquartered mining and metals conglomerate has invested around $1.25 billion in an industrial complex comprising an iron ore pelletising plant with a capacity of 9 million metric tonnes per year and a distribution centre with a through-put capacity of 40 million metric tons.

[Courtesy: U-Capital]