New Fixed Networks market report from Business Monitor International: "Oman Telecommunications Report Q4 2013"

Boston, MA -- (SBWire) -- 10/24/2013 --Oman's telecoms markets continued to expand, even as penetration rates have risen, underpinned by demand for higher value services, as well as continued population growth. Broadband growth has been particularly strong, however mobile subscriptions have continued to expand. Meanwhile, fixed-line subscriptions increased in early 2013, in contrast to the majority of neighbouring markets. We attribute this to strong private consumption growth, driven by the Omani government's expansionary budget and increases in public sector wages. While there are a number of positives, the market is limited by the country's small population size and is approaching saturation for some services, notably basic voice (fixed and mobile) services. We therefore expect operators to shift their strategy towards upselling higher value services to existing customers to sustain revenue growth.

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Key Data

- We estimate mobile subscriptions increased by 8.2% y-o-y to Q213, reaching a total of 5.401mn and penetration of 148.7%.
- Operator data show monthly blended mobile ARPU decline accelerated in H212 and 2013, with operators under pressure from IP substitution of SMS and voice services.
- The latest TRA data show fixed-line subscriptions increased 12.6% y-o-y to 331,596 in Q113, in contrast with the regional and global trend for fixed-to-mobile substitution.

Key Trends And Developments

Investments in data network infrastructure continue to reshape the market. In July 2013 Omantel announced the expansion of its 4G LTE network across 11 governates, giving 95% of the population access to speeds of up to 100Mbps. The incumbent has also been investing in supporting infrastructure and in May 2013 announced an agreement to build the Bay of Bengal Gateway submarine cable that will link Oman to Singapore, with several landing sites along the route. The submarine cable will expand capacity, as well as improving mantel's ability to service corporate customers.

While data service growth is a boon for operators, there are also examples emerging of the medium term risks associated with a transition to data centric business models. For instance, the latest regulatory data show that SMS volumes have fallen precipitously in Oman, down 47.5% y-o-y to Q113. This is a result of smartphone users shifting to IP alternatives to SMS such as WhatsApp, Viber and Facebook Messenger - which will squeeze operator revenues and margins. Based on the experience of operators in developed markets, there is little prospect of a reversal of this trend, barring the intervention of the regulator to ban IP substitutes to protect government owned operators as was the case in neighbouring Saudi Arabia. Promisingly for Oman's business environment, but not its operators, the TRA moved to deny rumours it would impose such a ban in August 2013, albeit without a full denial of the prospect of introducing the ban in future.

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