Global Insight Perspective | |
Significance | PCCW has broken Omantel's fixed-line monopoly and will bring a range of service offerings at lower prices. |
Implications | Fixed-line penetration in Oman has reached a plateau of around 10%; the new operator will have to offer a wider range of services to stimulate growth in the country. |
Outlook | The consortium will face tough entry conditions; however, it will be able to offer a wider range of products and services which will position it to compete with the incumbent. |
The consortium, whose full name is PCCW-Awaser Oman Consortium, scored the highest marks in the technical and commercial evaluation, as well as the financial bid. The licence allows PCCW to provide local and international fixed services, the establishment of infrastructure for national and international services, radio frequencies for broadband, submarine communication cables, and transmission stations in Oman. The authority said it will forward its recommendation to the Minister of Transport and Communications after all the necessary requirements are met by the winning consortium in line the tender terms and conditions. The consortium now has 15 days to honour its obligation; full financial details of the cost of the licence have not yet been published. Oman's fixed-line penetration is only 10%, yet internet penetration is much lower at 3%. The new operator will stimulate growth in both these sectors, but will launch initiatives to drive growth particularly for broadband.
Oman's incumbent operator, Omantel is in the process of developing itself in order to make it more competitive among its international peers. It is also restructuring its board of directors to include representatives from the government with relevant experience in the telecommunications sector (see Oman: 6 February 2008: Omani Government to Sell Up to 30% in Omantel). The operator has also recently invested outside its domestic market in Pakistan to sustain its growth (see Pakistan: 19 February 2007: Omantel Acquires 60% of Pakistani Operator, Worldcall, for US$193 mil.). Omantel recently announced that it would introduce VoIP services which will allow for cheaper voice calls compared to the current public switched telephone network (PSTN) levels (see Oman: 21 February 2007: Omantel to Launch VoIP Service in Oman).
Outlook and Implications
- Applications and Services: Although mobile uptake massively exceeds that of fixed-line services, the new fixed-line operator will have to focus on broadband technologies such as triple-play, which offers the customer a one-stop-shop for all their domestic communication needs. In other Middle Eastern countries where mobile penetration is extremely high, considerable investment has gone into the development of broadband services, which have stimulated growth across the region.
- Tough Entry Conditions: Although fixed-line penetration is fairly low at around 10%, seemingly with plenty of opportunity for growth, the new operator is likely to struggle in this new market. Fixed-line growth has been very slow throughout the Middle East and in more recent years has been on the decline. The expected high entry costs of licences and network roll-out will prevent operators from lowering prices too much.