Fiber Migration And 5G Expansion In Oman Will Unlock Opportunities

Key Takeaways

• Rapid adoption of fiber, 5G, and digital services is driving subscriber growth, higher margins, and long-term revenue opportunities in Oman and the GCC.
  
• Cost reductions, regulatory easing, and strong financial flexibility are enabling further investment in digital infrastructure and potential shareholder returns.
  
• Intensifying competition, technology shifts, and rising capital demands are eroding revenue stability and profitability, threatening the company's long-term earnings growth and market share retention.

Catalysts

Develops, operates, and maintains mobile and fixed telecommunications services in the Sultanate of Oman.

• The company is experiencing an acceleration in customer migration to fiber and advanced broadband technologies, supported by ongoing rapid urbanization and digital adoption in Oman and the wider GCC region. This shift is likely to boost subscriber growth and stabilize or increase ARPU, directly supporting top-line revenue growth.
  
• The substantial investments in 5G network expansion (now covering 80% of Oman's population), IoT solutions, and ICT services are positioning the company to capture value from emerging trends such as IoT deployment and smart city initiatives, which should create new high-margin revenue streams and underpin long-term earnings growth.
  
• The regulatory reduction of royalty fees for mobile and the unification to 10% (down from previously higher levels) is expected to directly improve net profit margins and free cash flow, strengthening the company's ability to either invest for further growth or return value to shareholders through dividends.
  
• Internal efficiency measures and digital transformation initiatives (such as the full sunset of 3G, operational cost optimization, and investment in advanced customer interface systems) are already yielding lower operating expenses, which should support EBITDA margin expansion and improve bottom-line profitability over time.
  
• The company's strong balance sheet, low net debt, and large undrawn credit facilities provide the financial flexibility needed to invest in strategic projects-such as wholesale data centers and tower/infrastructure modernization-that can unlock new revenue drivers and support sustainable earnings growth in the coming years.

Omani Qatari Telecommunications Company SAOG Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Omani Qatari Telecommunications Company SAOG's revenue will decrease by 0.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.2% today to 5.5% in 3 years time.
• Analysts expect earnings to reach OMR 14.0 million (and earnings per share of OMR 0.02) by about August 2028, up from OMR 10.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.7x on those 2028 earnings, up from 16.0x today. This future PE is greater than the current PE for the OM Wireless Telecom industry at 15.9x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 21.23%, as per the Simply Wall St company report.

Omani Qatari Telecommunications Company SAOG Future Earnings Per Share Growth

Risks

• Declining top-line revenue and net profit, driven both by the loss of wholesale/national roaming income-now permanent after Vodafone built its own network-and ongoing challenges in the fixed line business, signal risks to sustainable revenue and earnings growth.
  
• Intensifying competitive pressure from newcomers such as Awasr (MVNO) and the potential entry of Vodafone into fixed line services threaten to erode Ooredoo Oman's mobile and fixed market share, which could result in further downward pressure on ARPU and future revenue streams.
  
• The persistent churn of fixed wireless broadband customers, particularly as users migrate from legacy 4G technologies, puts at risk the stability of the company's home broadband subscriber base and could lead to continued subscriber and revenue losses in the fixed segment.
  
• Heavy ongoing capital expenditure requirements for 5G network expansion and digital transformation, while necessary for competitiveness, may constrain free cash flow and strain net margins if top-line growth does not sufficiently offset these investments.
  
• The commoditization of core connectivity and the ongoing substitution of traditional services (voice/SMS) by OTT players and IoT-driven SIMs (with potentially lower ARPU), may structurally suppress revenue per user and challenge the company's ability to deliver net profit growth over the long-term.

Valuation

• The analysts have a consensus price target of OMR0.31 for Omani Qatari Telecommunications Company SAOG based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of OMR0.38, and the most bearish reporting a price target of just OMR0.22.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be OMR254.5 million, earnings will come to OMR14.0 million, and it would be trading on a PE ratio of 25.7x, assuming you use a discount rate of 21.2%.
  
• Given the current share price of OMR0.25, the analyst price target of OMR0.31 is 18.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.