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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Fitch revises Omantel's outlook to positive, affirms at 'BB'

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BUSINESS REPORTER


MUSCAT, APRIL 22


International ratings agency Fitch Ratings has revised the Outlook on Oman Telecommunications Company's (Omantel) Long-Term Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'BB'. It has also upgraded the senior secured instrument rating to 'BB+' from 'BB'.


“The Outlook revision reflects the revision of the Outlook on Oman's 'BB' sovereign rating in April 2023. The upgrade of the instrument rating follows a change in Oman's Country Group Scoring under the Country-Specific Treatment of Recovery Ratings. Oman was previously a Group D country, which capped Omantel's instrument ratings at the 'BB' IDR. In March 2023, Fitch moved Oman to Group C, which increases the cap for Omantel's instrument ratings to one notch above the IDR,” Fitch stated.


According to Fitch, Omantel maintained its leading market share in fixed-line services with shares of 71% of subscribers and 82% of revenue in Oman at 2022. Omantel has a national footprint in 5G and the leading market share in fibre to the home (FTTH) at 47% at 2Q22. 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.


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 said.


Omantel's cash balance at end-2022 was RO 142 million and largely unrestricted, supported by a steady dividend flow from Zain sufficient to meet interest expenses. Omantel's short-term liquidity has significantly improved following the sale of towers in Oman and the IPO of its headquarters, according to Fitch.


Proceeds of asset sales have been used to make early prepayments of debt. During 2022, the company made bond prepayments of around $354 million. This included a $142.9 million pre-payment of its 5.5-year $600 million bonds. The outstanding $457 million on these bonds will mature in October 2023. In January 2023, Omantel also fully prepaid its $340 million term loans.


The company is 51% owned by the state (through wholly-owned investment funds), with the balance held by Omani pension funds and free float. In 2017 Omantel acquired a 21.9% stake in Zain, which it fully consolidates into its audited accounts on the basis of board control.


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