Omantel readies bid for Worldcall
Dubai, June 24, 2007
Oman Telecommunications Company (Omantel) said it was considering a bid for a majority stake in Pakistan's Worldcall to gain a foothold in the world's third-fastest growing telecoms market.
Omantel, the country's second largest firm by market value, said it would begin talks with the Pakistani wireless local loop operator, although it did not say what it was willing to pay or how much it wanted to buy.
A 51 per cent stake in Worldcall, which also offers long distance calls, would be worth around $113 million at its last traded price.
The company's stock has more than doubled in price over the last year, bringing its market value to around $220 million.
A Worldcall source said in Karachi last week that the deal was struck at a meeting on Tuesday and should be wrapped up soon.
Omantel said the company's board had only agreed on Tuesday to negotiate a deal.
'The formation of the negotiating team does not mean, in any way, that there has been a final decision by the board of directors to invest in WorldCall,' Omantel said in a statement.
Last month, Omantel chief executive Mohammed Al Wohaibi said his company would conclude the purchase of a majority stake in a Pakistan-based telecom operator in June, although he did not identify the company.
Omantel's stock rose after the announcement from a company that is bracing for the end of its fixed line monopoly this year, two years after the government opened up the mobile business to competition.
In that time rival Nawras, partly owned by Qatar Telecommunications, has acquired 34 per cent market share, according to Marc Hammoud, telecoms analysts at Shuaa Capital.
About 65 per cent of Oman's residents have mobile phones compared with the 33 per cent in Pakistan, a nation of 160 million people that Hamoud says is world's third-fastest growing mobile market after China and India.
'Clearly Omantel is looking at the macro picture. The Pakistan market as a whole has tremendous opportunity for growth,' Hammoud said.
Other telecom operators in the world's biggest oil exporting region have targeted Pakistan as they expanded abroad, armed with petrodollars from their government shareholders.
Qatar Telecommunications completed the purchase of a majority stake in Pakistan's Burraq Telecom last month.
Emirates Telecommunications Corp bought a 26 per cent stake in Pakistan Telecommunications (PTCL) for $2.6 billion in 2005.
Etisalat's experience with PTCL illustrates the challenges Omantel faces in the Pakistani market.
Dozens of rivals, including domestic wireless players such as Worldcall and Telecard, have forced PTCL to slash charges. In April it posted a near 30 per cent drop in 9-month net profit, as competition ate into call traffic revenues.
'Omantel is entering a tough market and it's not going to be easy to generate profit,' said Hammoud.
'To make a substantial impact on its business, Omantel needs to look for something much bigger.' Reuters