Oman's telecommunications operator Nawras recorded a 35.9% increase in third-quarter net profit in 2014, supported by higher revenue, improved operating margins and growth in its customer base.The company, majority-owned by Qatar's Ooredoo Group, earned 10.8 million Omani rials ($28.1 million) during the three months ended 30 September 2014, compared with approximately eight million rials during the corresponding period of 2013.
The figures, announced on 15 October 2014, showed that Nawras was benefiting from investments in network modernisation and expanding demand for telecommunications services. The results exceeded an analyst's forecast of 10.2 million rials.
Quarterly revenue increased by 13.9% to 57.8 million rials from 50.8 million rials a year earlier. The improvement reflected stronger contributions from mobile and fixed data services alongside international voice traffic.
Earnings before interest, tax, depreciation and amortisation, or EBITDA, increased by 27.3% to 31.2 million rials, compared with 24.5 million rials during the corresponding quarter of 2013.
The increase in operating earnings outpaced revenue growth, indicating an improvement in profitability as the company generated additional income from its expanded network infrastructure.
Nawras reported an EBITDA margin of approximately 54%, compared with about 48% a year earlier. The improvement demonstrated that a greater proportion of revenue was being converted into operating earnings before depreciation and other financing costs.
Chief executive Greg Young had explained in September 2014 that the operator was beginning to benefit from substantial investments undertaken over several years to modernise its telecommunications network.
The investment programme involved upgrading existing infrastructure, increasing network capacity and improving broadband performance to accommodate growing demand for mobile internet services.
The financial results indicated that stronger operating earnings were helping offset the depreciation expenses associated with network investment, which had previously weighed on the company's profitability.
Nawras had reported increasing quarterly profits in four of the preceding five quarters, following seven consecutive quarters of declining earnings. The improvement marked a significant change in its financial performance during 2014.
For the nine months ended September 2014, net profit increased by 27.7% to 29.5 million rials from 23.1 million rials during the comparable period of 2013.
Revenue for the nine-month period reached 166.1 million rials, an increase of 11.3% from 149.2 million rials. The company attributed the expansion primarily to higher mobile and fixed data revenue and international voice services.
Nine-month EBITDA rose by 23.6% to 87.9 million rials, compared with 71.1 million rials in the corresponding period of the previous year.
Customer numbers also increased, strengthening the operator's position in Oman's competitive telecommunications market. Nawras reported 2.514 million mobile and fixed customers at the end of September, representing growth of 6.5% from 2.361 million a year earlier.
The expansion was concentrated in mobile services, particularly prepaid subscriptions, which remained the largest component of the company's customer base.
Mobile prepaid customers increased by 7.1% to 2.262 million, compared with 2.112 million at the end of September 2013.
Postpaid mobile subscriptions rose by 2.8% to 192,427 from 187,163 during the same period, indicating more modest growth among customers using monthly billing arrangements.
The fixed services business experienced a different trend. Customer numbers declined by 2.4% to 59,630 from 61,090 a year earlier.
Nawras attributed the decline to a transition period associated with upgrading its home broadband technology. The company said the changes were intended to improve the quality of services available to residential customers.
The contrasting subscription trends illustrated the importance of mobile operations to overall customer growth, while fixed broadband services underwent infrastructure improvements.
Nawras operated as Oman's second telecommunications provider, competing with Oman Telecommunications Company, commonly known as Omantel, which had previously enjoyed a monopoly in the country's telecommunications market.
The company began mobile operations in 2005 and subsequently expanded into fixed telecommunications and broadband services, increasing competition across different customer segments.
Its network modernisation programme included improvements to base stations, core network infrastructure and data capacity. These upgrades were designed to improve coverage, connection speeds and service reliability.
The company had also identified declining traditional text messaging revenue as a challenge, reflecting changing customer usage patterns as mobile data services became increasingly important.
During the first half of 2014, Nawras had reported revenue of 108.2 million rials and net profit of 18.7 million rials, providing the financial base for its third-quarter performance.
Topics
Oman