Oman Telecommunications Company SAOG Group announced its financial results for the six-month period ended June 30, 2020, achieving a net profit of RO 100.5 million (before non-controlling interests) compared to RO 126.5 million in 2019, a decline of 20.5 per cent.
This decline in the business was mainly driven by a 27 per cent year-on-year (YoY) decline in Group's net profit for the second quarter of 2020 due to the unavoidable impacts of COVID-19 pandemic, predominantly on the core mobile business. The Group recorded relatively stable consolidated revenues reaching RO 1242 million in the first half of 2020 compared to RO 1258 million in 2019.
Omantel Group achieved these results despite the impacts of COVID-19 pandemic that virtually halted economic activity and travel across the region. Omantel’s management priority was to ensure its network was operating at optimal levels to provide vital connectivity to the Omani authorities and community, as demand for mobile and fixed broadband reached historic highs.
Furthermore, through its proactive steps and focused strategy, management was able to mitigate the COVID19 impacts through a series of initiatives that included significant investments in digital infrastructure (Enhanced Mobile App, Portal and the Call Centre) which helped in ensuring that the digital channels were available for the customers to enjoy uninterrupted services. Moreover, Omantel's earlier investments in 5G infrastructure helped to grow Home BroadBand revenue by 8.1 per cent in the first half of 2020 compared to the same period of 2019.
Omantel domestic operations revenue witnessed an increase of 11 per cent YoY reaching RO 288 million in the first half of 2020 compared to RO 259 million in the same period of 2019. This was mainly driven by an increase in international transit international wholesale business and handset revenues, which are typically low margin revenue streams compared to the core mobile operator’s revenue. Adjusted for the above, core mobile-related revenues for first half of 2020 was RO 221 million compared to RO 232.5 million in 2019, a decrease of 5 per cent YoY which had a significant impact on EBITDA and net profit during the period.
On the international operations side, Omantel’s international wholesale business diversification strategy helped the Company to grow the international capacities business by 7.6 per cent in the first half of 2020 compared to 2019 which continues to exhibit a high amount of resilience. Proactive Cost Optimization measures on both Opex and Capex which included contract renegotiations, cancellation and re-scheduling of some capex projects, efficient cash flow management among others have resulted in an overall reduction of 6 per cent in operating and administrative expenses YoY.
Zain Group contributed RO 94.8 million to the net profit in the first half of 2020 (before non-controlling interest) of Omantel Group compared to RO 114.8 million in 2019 a decrease of 17.4 per cent YoY. After adjusting for non-controlling interest, Zain Group contributed RO 18.2 million in the first half of 2020 compared to RO 21.4 million in the year 2019.
Among the key elements that had an impact on the margins were the decline in the overall voice revenue on account of free airtime offer launched from March 27 to April 15, 2020 to support the community members to stay at home and maintain social distancing, further decline in enterprise voice revenue on account of the lockdown, lockdown resulting in the closure of retail shops, partners outlets etc. leading to lower recharge, leisure and travel coming to a halt leading to a reduction in roaming revenues, decline in Mobile BroadBand revenues on account of substitution effect with Fixed Broad Band revenues, increase in impairment charges (as required by IFRS 9) on the Enterprise and Government segment which is in line with the recent rating downgrades announced by the rating agencies in addition to the lower collection realized during the period.
Commenting on these results, Talal bin Said al Mamari, CEO of Omantel said, “There is no doubt that the Corona pandemic and the precautionary measures taken by the concerned authorities to alleviate its effects have affected all business sectors around the world. Omantel proactively sought to mitigate the impacts of this pandemic, first by focusing on providing vital connectivity to all to ensure access to essential medical, commercial and financial services. Second, our business continuity strategy saw the implementation of a number of innovative measures and initiatives to mitigate the effects of the lockdown on the business".
Al-Mamari continued, "We are pleased by the resilience of our business given that our domestic revenues grew by 11 per cent and overall Group revenues were relatively stable. This would have not been achieved if it were not for our dedicated employees who made sacrifices throughout this time of crisis. Omantel ensured its employees’ safety by supporting and providing them the necessary equipment to efficiently and safely function.”
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