Nawras, Qatar Telecom's (Qtel) Oman unit, is targeting fixed and mobile broadband to drive earnings growth as mobile subscriber numbers decline, its chief executive said.

Nawras, which has a 42 per cent share of Oman's mobile market and a similar share of revenue, last month reported a 13.6 percent drop in first-quarter profit.

Increased capital and operational expenditure -- Nawras will spend RO140 million on capital expenditure for 2010 to 2011 -- was the main cause of this drop, Nawras chief executive Ross Cormack told Reuters in an interview, although mobile subscribers are also in retreat.

Nawras had 1.93 million mobile subscribers in the first quarter, down 4.5 per cent from the fourth quarter of 2010, while ARPU (average revenue per user) dropped 3.8 per cent.

Mobile penetration in Oman was 140 per cent by the end of 2009, according to data from the International Telecommunications Union, the most recent available.

With the mobile voice market stagnating, fixed and mobile broadband will drive Nawras' growth, Cormack said, while service level agreements (SLA) -- guaranteeing a certain level of bandwidth -- with corporate clients will also become increasingly important.

"About 10 per cent of Oman's 30,000 businesses are of sufficient scale to potentially require an SLA and, in time, SLA will become a significant part of our business," said Cormack.

Fixed broadband penetration in Oman was less than 2 per cent in 2009, but mobile broadband penetration was 43 per cent, according to ITU.

Broadband uses much more bandwidth than voice, so rising demand for data requires increased infrastructure investment, eroding margins.

"Margins are under pressure and we constantly re-examine our costs, but if you get it right the first time you have a lower cost base," said Cormack.   

Nawras has a network roaming agreement with former monopoly Omantel that covers less than 1 per cent of Oman's population, but Cormack does not foresee following the trend in other markets to sell tower infrastructure to a third party, becoming a tenant to cut maintenance costs.
   
"It's too early to get into that," he added. - Reuters