Digital Connectivity Expansion Will Shape Future Opportunities

Key Takeaways

• Diversification into digital services and international operations is driving new growth opportunities and reducing reliance on the domestic market.
  
• Ongoing infrastructure investment and regulatory support are strengthening profitability and positioning as a regional tech leader.
  
• Increased competition, reliance on volatile markets, high leverage, and slow-maturing diversification efforts are straining profitability, margin expansion, and financial flexibility.

Catalysts

Oman Telecommunications Company SAOG, together with its subsidiaries, establishes, operates, develops, and maintains telecommunication services in the Sultanate of Oman and internationally.

• The company is experiencing strong growth in non-core digital verticals such as ICT, cloud, cybersecurity, and fintech (OmPay), leveraging regional digital transformation and the proliferation of cashless/digital services. This diversification is set to create new, higher-growth revenue streams and contribute to consolidated top-line growth.
  
• Omantel's continued investment in next-generation infrastructure (fiber, 5G, digital channels, and subsea cables), along with successful trials of 50GPON technology and cloud partnerships, supports its transformation into a regional tech and digital connectivity hub. This positions the company to capitalize on rising demand for high-speed, low-latency networks, positively impacting ARPU and EBITDA margins.
  
• The favorable regulatory environment-including a reduction in mobile service royalty rates from 12% to 10% and TRA initiatives to control destructive price competition-is expected to directly support future EBITDA margin expansion and profitability.
  
• The rapid adoption of smart solutions and IoT is driving a surge in M2M (machine-to-machine) SIMs and the rollout of major projects (such as smart metering), positioning Omantel to benefit from secular trends in IoT and the digital economy while supporting growth in revenue and subscriber base.
  
• Through its significant international exposure via Zain Group (with strong performance in high-growth geographies such as Iraq, Sudan, and KSA), Omantel is mitigating growth limitations in its home market and unlocking earnings growth and margin expansion at the group level.

Oman Telecommunications Company SAOG Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Oman Telecommunications Company SAOG's revenue will grow by 4.7% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 2.7% today to 2.3% in 3 years time.
• Analysts expect earnings to reach OMR 85.0 million (and earnings per share of OMR 0.11) by about August 2028, up from OMR 84.3 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as OMR102 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.5x on those 2028 earnings, up from 8.8x today. This future PE is greater than the current PE for the OM Telecom industry at 8.9x.
• 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 27.58%, as per the Simply Wall St company report.

Oman Telecommunications Company SAOG Future Earnings Per Share Growth

Risks

• Intensifying competition in the domestic mobile segment, including aggressive pricing and value-dilutive behavior by new entrants like Vodafone, continues to pressure Omantel's revenue growth and margins, and persistent price wars could further erode profitability.
  
• Organic postpaid subscriber growth is now primarily driven by low-ARPU M2M SIMs, while underlying growth from higher-margin traditional subscribers is marginal, signalling limits to future ARPU and revenue expansion from the core domestic telecom business.
  
• Domestic net profits declined 9.5% year-over-year in H1 2025, and overall group net profit growth was heavily reliant on outsized recovery and currency-impacted results from volatile markets such as Sudan and Iraq, increasing earnings volatility and exposing the group to idiosyncratic, region-specific risks.
  
• The group's elevated leverage (net debt/EBITDA at 3.5x vs. medium-term target of 2.5x–2.7x) and rising CapEx requirements for 5G, fiber, and digital transformation create ongoing balance sheet pressure and constrain free cash flow, which may limit dividend growth or dampen net margins if financing costs rise in the long term.
  
• Investments in ICT, fintech, and cloud segments take years to mature and currently operate at lower margins than core telecom activities, meaning that while strategic diversification is underway, near-term margin dilution and delayed profitability from these initiatives may weigh on group returns and earnings growth over the medium term.

Valuation

• The analysts have a consensus price target of OMR1.119 for Oman 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 OMR1.22, and the most bearish reporting a price target of just OMR1.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be OMR3.6 billion, earnings will come to OMR85.0 million, and it would be trading on a PE ratio of 20.5x, assuming you use a discount rate of 27.6%.
  
• Given the current share price of OMR0.99, the analyst price target of OMR1.12 is 11.2% 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.