MUSCAT: International ratings agency Fitch Ratings has affirmed Oman Telecommunications Company SAOG's (Omantel) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable Outlook.
“Omantel's rating remains constrained by Oman's sovereign rating (BB/Stable) as a government-related entity (GRE). This reflects that 51 per cent of the company is directly or indirectly owned by the Omani government, which consequently exerts strong control over it. Omantel's 'bbb-' Standalone Credit Profile (SCP) is higher than its IDR. This reflects a balance of its leading market share in its domestic market, low leverage and the elevated competitive risks in a mature market following the entrance of Oman Futures Telecommunications Company (Vodafone Oman) in 2022,” the London-based agency stated in a press announcement.
The sale and leaseback of Omantel's head offices and 2,519 of its mobile towers in Oman in 2022 will lead to significant deleveraging as proceeds will be used to repay debt, according to Fitch. “Omantel should have ample leverage headroom at its 'bbb-' SCP on a deconsolidated basis for Zain Group as Omantel owns less than 50 per cent. We expect Fitch-defined EBITDA net leverage (including dividends from Zain) of 2.1x at end-2022,” it stated
Omantel maintained its leading market share in fixed line services with shares of 71 per cent of subscribers and 82 per cent of revenue in Oman at 3Q22. Omantel has a national footprint in 5G and the leading market share in fibre to the home (FTTH) at 47 per cent at 2Q22, according to the ratings agency.
“As a result, the company is well placed to capture growth from upselling customers into gigabit speed-capable packages in 5G fixed wireless access (FWA) and FTTH,” it stated
“Both technologies have higher ARPUs than traditional copper lines. Where both are available, we believe the increased demand for data consumption and lower latency will see fibre demand grow faster than FWA. Omantel is expected to continue rolling out FTTH across Oman where only around half of premises currently have access to the technology. Outsourcing mobile tower capex to Helios could allow Omantel to roll out fibre more quickly,” it added.
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