TELECOMS MOVEMENT IN OMAN

UNCLAS MUSCAT 000306

SIPDIS

STATE FOR EB/CIP (DROHATGI),NEA/ARPI (RSMYTH)
STATE PASS USTR FOR JBUNTIN, JFENNERTY, AAUGEROT, KSCHAGRIN
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT

E.O. 12958: N/A
TAGS: ECPS KPRV ETRD MU
SUBJECT: TELECOMS MOVEMENT IN OMAN

REF: A. MUSCAT 243


B. OMAN-USTR TELECOMS DVC 2/1/05


1. In the ref B digital video conference between USTR and
Omani government telecommunications officials, Oman's
Telecommunications Regulatory Agency (TRA) pledged that the
award of an operating license to a competing mobile phone
operator was "imminent." On February 19, Sultan Qaboos
promulgated a royal decree (No. 17/2005) formally issuing the
operating license to Oman-Qatar Telecommunications Company
for a period of 15 years. The joint venture, which goes by
the commercial name of Nawras Telecom, has already been
lining up new subscribers, and will launch its services "very
soon," according to CEO Ross Cormack. TRA official Naashia
al-Kharusi (Oman's lead telecoms negotiator in the upcoming
free trade agreement negotiations) told P/E Chief February 21
that the operating license was issued as Category 1, meaning
that Nawras will be providing its own infrastructure (through
an alliance with Ericsson) rather than relying on incumbent
Omantel's network. Nawras paid a one-time payment of RO 40
million ($104 million) for the license, and reportedly plans
to invest $1.7 billion over the next 10 years.


2. State-owned incumbent Omantel made headlines of its own
February 21 by announcing a "significant" cut in its
international dialing rates effective March 1. Unnamed
sources at Omantel were quoted in the local press as saying
that a range of service prices are expected to fall in 2005
in anticipation of the competition not only from Nawras (on
the mobile side),but also from "new operators coming into
the (fixed line) market in the future." Omantel pledges to
both cut its rates and improve the quality of the service to
stay competitive, as demonstrated by the aggressive pricing
strategy and advertising campaign launched by Oman Mobile
(Omantel's cellular operations) in the past six months.
Al-Kharusi told P/E Chief that she still expects a second
fixed-line operator to be identified before the end of this
year. In the meantime, the floating of 30 percent of the
shares in Omantel is now expected to take place by June,
according to Omantel Executive President Mohammed al-Wohaibi
in a February 22 press interview.
BALTIMORE