Omani telecoms I Reiterate Overweight on Ooredoo: royalty overhang gone, we see little risk from a third entrant
Royalty overhang removed with the 2015 budget announcement. Oman's 2015 state budget, released 1 January, excluded an expected 500bps hike to the 7% royalty rate paid currently by telecom operators in Oman which would have decreased our valuation for both Omantel and Ooredoo by c20%. The budget in fact raises spending at the cost of a large projected deficit due to the plunge in oil prices. State expenditure this year is estimated at OMR14.1bn (USD36.6bn; up 4.5% from last year's original plan) against projected revenues of OMR11.6bn, down 1%, creating an anticipated deficit of OMR2.5bn, equivalent to about 8% of GDP. The exclusion of the royalty hike is positive to telecom operators. It was further confirmed to us by Omantel management that the Ministry in fact rejected out of hand the proposal suggested by the Shura Council late November to raise the royalty rate, settling instead for OMR59mn from royalty and taxation in line with the current rates.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
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The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
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