Solid investment will see growth return to Oman

Although intense competition is driving down ARPUs and market saturation is reducing subscriber growth opportunities, operators in Oman continue to invest in modern fixed and mobile networks - a move that will facilitate the rollout of higher value services in the future, according to BMI.

According to the Telecommunications Regulatory Authority (TRA), there were 4.474mn mobile subscribers in Oman at the end of March 2011. This represented a decrease of 2.9% q-o-q, the first ever quarterly contraction to the Omani mobile market. Mobile services resellers accounted for 10.6% of the total subscriber base, while Omantel and Nawras had market shares of 46.2% and 43.2% respectively.

The decline in subscribers during Q111 indicates slowing subscriber growth. The implementation of the regulator’s directive to disconnect inactive lines is largely responsible for the subscriber losses. Meanwhile, with a market penetration rate above 150%, network operators are likely to focus more on migrating their existing prepaid subscribers unto higher value postpaid services in order to drive revenue growth. Growth is expected to return in the latter quarters of the year, albeit at significantly slower rates than in previous years. By 2015, mobile penetration is predicted to reach 167.3%, with 3G subscriptions accounting for about 58.5% of total mobile subscriptions.

According to the regulator, the number of active fixed-line subscriptions dropped by 3.1% q-o-q to 273,123 during the first three months of 2011. The decline in fixed-line subscriptions is likely to fall further, despite the best efforts of Omantel and Nawras. Fixed-line penetration in Oman is expected to drop below the 8% mark by the end of 2015. One of the main reasons for the falling demand for fixed lines is the increasing use of wireless networks for internet access. According to the regulator, there were 2.030mn 3G subscribers in Oman at the end of Q111. Although most of these access the network on mobile phones, a growing number of subscribers are using dedicated USB modems to access the internet. Oman will have about 692,000 broadband subscribers at the end of 2011, most of which access the web over wireless networks. By the end of 2015, Oman’s broadband penetration rates should surpass the 40% mark.

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