Omantel tops the chart for net profit growth in first half of 2008

Research conducted by Comm. telecoms publication shows that while revenue growth for operators in the Gulf region remains in double digits, net profits are being squeezed significantly, with two operators on Comm.’s list of eight regional service providers actually reporting a fall in profitability between the first half of 2007 and the first half of 2008.

Comm. compared the first half-2008 results of eight mobile and telecoms providers across Gulf and north Africa with their performance for the corresponding period a year earlier. This exercise revealed that while organic and inorganic growth was spurring top line growth, the effects of increased competition and lower average marginal revenue per user (AMPU) was squeezing net profits.

All of Comm.’s calculations were based on local currencies in order not to distort comparisons given the slide of the US dollar against global currencies in the last year.

Omantel topped the list, recording the highest year-on-year growth in net profit between the first half of 2007 and the first half of 2008. The Omani incumbent achieved an increase in net profit amounting to 54.23 per cent over the period. This was in comparison to a 14.33 per cent rise in revenues at the telco over the same period, the net profit improvement being attributed to strong growth in mobile and broadband services.

At the other end of the scale, Batelco recorded the largest fall in year-on-year net profit, amounting to negative 2.86 per cent between the first half of 2007 and the corresponding period in 2008. The telco’s chairman, Sheikh Hamad Abdulla Al Khalifa acknowledged the highly competitive operating environment in Bahrain, noting that with 69 licensed operators in the kingdom, the telco continues to review its operating strategies in order to retain its market share.

A second regional operator also registered a year-on-year decline in net profit despite recording a 19.67 per cent rise in revenues over the period. The message to operators in the Gulf and north Africa thus appears to be that the pursuit of top-line growth without due cognisance of operational expenses could lead to profit erosion.

Details on where operators ranked in terms of year-on-year growth of net profit and revenues for the first half of 2008 will be published in the September issue of Comm., available at the beginning of that month.