Digital Services And Cloud Computing Will Expand GCC Markets

Key Takeaways

• Strong ICT, fintech, and regional expansion drive diversified revenue growth, while population trends and broadband adoption support a rising subscriber base and ARPU.
  
• Investments in 5G, digital platforms, and cost optimization position the company for improved margins and efficiency despite short-term pressure from technology upgrades.
  
• Rising competition, large capital spending needs, and reliance on risk-prone foreign markets could constrain revenue growth, margins, and the ability to sustain profitable expansion.

Catalysts

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

• The rapid growth of digital services, cloud computing, and IoT solutions across the GCC is boosting enterprise and wholesale revenues, as demonstrated by Omantel's strong ICT and fintech revenue growth (up 61%) and fintech verticals like ZOI and ZainTech, which are expected to drive higher top-line growth and improve margins as investments in submarine and terrestrial connectivity mature (impacting revenue and margin expansion from 2026 onwards).
  
• Regional population growth, urbanization, and increased broadband and mobile penetration are supporting a steady rise in Omantel's subscriber base and ARPU, especially in fixed broadband, providing a foundation for sustainable long-term revenue growth.
  
• Strategic regional expansion, particularly the continued strong financial performance from Zain Group (significant revenue and profit contributions from Iraq, Sudan, Jordan, and KSA), diversifies Omantel's earnings and reduces reliance on the slow-growing domestic market, supporting consolidated revenue and profit growth.
  
• Ongoing investments in 5G rollout, digital customer channels, and network upgrades position Omantel to capture higher-value service opportunities and ARPU uplift as 5G adoption scales, laying the groundwork for future earnings and margin improvement.
  
• Cost optimization and digital transformation initiatives (like network automation and digitized customer-facing processes) are expected to gradually improve efficiency and net margins, even as current EBITDA faces short-term pressure from upfront tech investments.

Oman Telecommunications Company SAOG Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Oman Telecommunications Company SAOG's revenue will grow by 5.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.6% today to 2.7% in 3 years time.
• Analysts expect earnings to reach OMR 98.4 million (and earnings per share of OMR 0.13) by about August 2028, up from OMR 80.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.5x on those 2028 earnings, up from 8.3x today. This future PE is greater than the current PE for the OM Telecom industry at 8.3x.
• Analysts expect the number of shares outstanding to decline by 0.3% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 27.45%, as per the Simply Wall St company report.

Oman Telecommunications Company SAOG Future Earnings Per Share Growth

Risks

• Intensifying competition in both mobile and fixed markets, particularly from Vodafone in Oman (with aggressive prepaid pricing) and the impending entry of AWASR into mobile, could further pressure ARPU growth and subscriber retention, risking top-line revenue and net margin stability over the long term.
  
• Heavy capital expenditure requirements to maintain network leadership (e.g., 5G expansion, fiber, upgrading digital platforms), especially when much of the CapEx is categorized as "growth CapEx" rather than maintenance, may strain free cash flow and reduce return on invested capital if new digital and tech initiatives take longer to monetize or face adoption hurdles.
  
• The Sudan and Iraq markets-key drivers of recent subscriber and revenue growth through Zain-remain exposed to significant geopolitical instability and foreign currency risk, especially with challenges in repatriating cash from Sudan and potential volatility impacting group earnings and profit attribution to shareholders.
  
• Sharp growth in wholesale and international revenues (e.g., through ZOI) is currently concentrated in low-margin voice segments and depends on successful future execution of submarine cable and terrestrial connectivity investments; delays or failing to capture higher-margin digital/enterprise revenue streams may limit profitability growth and EBITDA margin expansion.
  
• The Omani telecom market is reaching saturation, as indicated by over 79% fixed broadband penetration and a focus shifting from subscriber growth to value-added services and retention; with limited organic growth potential, Omantel may increasingly rely on overseas expansion, exposing it to integration risk, dilution of margins, and unpredictable earnings contribution across volatile regional markets.

Valuation

• The analysts have a consensus price target of OMR1.053 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 OMR0.94.
  
• 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 OMR98.4 million, and it would be trading on a PE ratio of 16.5x, assuming you use a discount rate of 27.4%.
  
• Given the current share price of OMR0.89, the analyst price target of OMR1.05 is 15.5% 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.