Q2 2026 Oman Telecommunications Company SAOG Earnings Call

August 20, 2026

Speaker #1: Ingress. We will wait for another 5 additional 5 minutes, to— Or, or 2 minutes, for investors and analysts to join the call. Thank you very much.

Speaker #1: Excluding minority interests, we are at 31.8 million Omani Riyals, and we'll come to the details in the following slides. Now, to highlight the key developments during the first half of the year, as you have seen earlier, the total group net profit attributable to Omantel grew by 60%.

Speaker #1: This was mainly driven by higher Zain Group EBITDA and investment income, and one point which Omantel disclosed to the market and Zain Group as well is the announcement of the exceptional interim dividend from Zain of an additional OMR 8.2 million.

Ghassan Khamis Al Hashar: Excluding minority interest, we are at 31.8 million Omani rials, and we will come to the details in the following slides. Now, to highlight the key developments during the H1 of the year, as you have seen earlier, the total group net profits are attributable to Omantel Group by 60%. This was mainly driven by higher Zain Group EBITDA and investment income. One point which Omantel disclosed to the market, and Zain Group as well, is the announcement of the exceptional interim dividends from Zain of an additional 8.2 million Omani rials. So the expected interim dividend income may reach 220 million Omani rials for the H2 of this year, compared to about 11 to 11.5 million last year. On the core telecom revenue, of course, you have seen that Omantel was up by 25.1 million rials. Growth has been posted in all segments.

Ghassan Khamis Al Hashar: Excluding minority interest, we are at OMR 31.8 million, and we will come to the details in the following slides. Now, to highlight the key developments during the H1 of the year, as you have seen earlier, the total group net profits are attributable to Omantel Group by 60%. This was mainly driven by higher Zain Group EBITDA and investment income. One point which Omantel disclosed to the market, and Zain Group as well, is the announcement of the exceptional interim dividends from Zain of an additional OMR 8.2 million. So the expected interim dividend income may reach 220 million Omani rials for the H2 of this year, compared to about 11 to 11.5 million last year. On the core telecom revenue, of course, you have seen that Omantel was up by 25.1 million rials. Growth has been posted in all segments.

Speaker #1: So, the expected interim dividend income may reach 220 million Omani riyals for the second half of this year, compared to about 11 to 11.5 million last year.

Speaker #1: On the core telecom revenue, of course, we— you have seen that Omantel was up by OMR 25.1 million. Growth has been posted in all segments.

Speaker #1: On the ICT and new tech revenues, it was up by 10.7 million, supporting the TechCo strategy. On auto—in OTEC, of course, there are further expansions in ICT segments through continuous expansion in our strategic partnerships.

Ghassan Khamis Al Hashar: On the ICT and new tech revenues, it was up by 10.7 million, supporting the Techco strategy. In Otech, of course, there are further expansions in ICT segments through continuous expansion in our strategic partnerships. From now, Aisha will walk you through the coming slides as we go further in more details in our financial performance. Aisha, please.

Speaker #1: From now, Aisha will walk you through the coming slides as we go further into more details on our financial performance. Aisha, please.

[Company Representative] (Omantel): Thank you very much, Mr. Ghassan. Now, before getting into the financials, we would like to give the analysts and the investors a recap of the group overview. Before getting to the H1 2026 financial performance, we would like to give a recap on how Omantel Group is positioned today as a technology and a telecom powerhouse supported by these three verticals. We have the core telecom vertical and the ICT and the new technology or the emerging technology vertical, and one of the most important and strategic verticals for us is the Zain partner of growth. On the core telecom, Omantel continues to have a leadership in both retail and wholesale business.

Speaker #2: Thank you very much, Mr. Vassal. Now, before getting into the financials, we would like to give the analysts and investors a recap of the group overview before getting to the H1 2026 financial performance.

Speaker #2: We would like to give a recap on how Omantel Group is positioned today as a technology and telecom powerhouse, supported by Q3 verticals.

Speaker #2: We have the core telecom vertical, the ICT, and the new technology or emerging technology vertical. One of the most important and strategic verticals for us is the Zain Partner of Growth.

Speaker #2: On the core telecom, we continue— Omantel continues to have a leadership in both retail and wholesale business, and the retail Omantel continues to be the leading telecom with 3.7 million mobile subscribers and, sorry, both mobile and fixed, around 3.7 million, with a leading subscriber market share both in fixed and mobile.

[Company Representative] (Omantel): In the retail, Omantel continues to be the leading telecom with 3.7 million mobile subscribers and fixed. Sorry, both mobile and fixed, around 3.7 million, with a leading subscriber market share, both in fixed and mobile, with 55.2% and 39.7% in the mobile subscriber market share. As well as further strength with our wholesale arm, making Oman one of the top connected countries in the region or in the Middle East, having more than 20 subsea cable system and around seven landing stations connecting the east to the east. As well as we have a key partnership in the region with Equinix, having the first two neutral data centers in Muscat and Salalah. As well, one of our largest regional connectors, the joint venture between Zain and Omantel, Zain Omantel International, being the number one wholesale provider, managing both Omantel and Zain wholesale business.

Speaker #2: With 55.2% and 39.7% in the mobile subscriber market share, as well as further strength with our wholesale arm, we are one of the top-connected countries in the region—or in the Middle East—having more than 20 subsea cable systems and around 7 landing stations connecting the East to the East. Additionally, we have key partnerships in the region with Equinix, having the first two neutral data centers in Muscat and Salalah.

Speaker #2: As well, one of our largest regional connectors—the joint venture between Zain and Omantel, Zain Omantel International—being the number one wholesale provider, manages both Omantel and Zain's wholesale business.

Speaker #2: Looking at the ICT and the emerging tech, or the new tech, vertical, it has grown in revenue by 63.8%, as mentioned by Mr. Vassal Al-Hashar.

[Company Representative] (Omantel): Looking at the ICT and the emerging tech or the new tech vertical, it has grown in revenue by 53.8%, as mentioned by Ghassan. The ICT and new technology continues to demonstrate solid growth across all the segments supported by our ICT portfolio, with the launch of Otech, the grouping Oman Data Park and Tadoom, and also partnering with Infoline and ZainTech. As well, we have our digital portfolio still that is scaling and monetizing Omantel's digital base. Lastly, we have Zain partner of growth, which enabled Omantel to expand in additional 7 markets having subscribers of almost 51.9 million. Also expanding in the ICT and emerging technologies through ZainTech and ZainCash, enabling Omantel to partner with these verticals of growth. Moving to the next slide, which will be on the financial updates on the group level.

Speaker #2: The ICT and new technologies continue to demonstrate solid growth across all the segments, supported by our ICT portfolio. With the launch of OTEC, the grouping Amman Data Park and Tadoom, and also partnering with Infoline and ZainTech, as well, we have our digital portfolio that is still scaling, monetizing Omantel's digital base.

Speaker #2: And lastly, we have Zain, partner of growth, which enabled Amman to expand into an additional seven markets, having a subscriber base of almost 51.9 million.

Speaker #2: Also expanding in the ICT and emerging technologies through ZainTech and Zain Cash, enabling Omantel to partner with these verticals of growth. Now, moving to the next slide.

Speaker #2: This will be on the financial updates at the group level. Omantel Group performance, as mentioned by Vassal, has shown strong growth both from domestic performance and at the group level.

[Company Representative] (Omantel): Omantel group performance, as mentioned by Ghassan, the group has shown a strong growth, both from the domestic performance and on a group level. The revenue has shown a growth of 5.7%, reaching to OMR 1.7 billion, supported by domestic growth and solid contribution from Zain operations and growth verticals. On the EBITDA level, increased by 3.9% to reach OMR 551.1 million, which also show reflection a solid operational performance across major Zain markets. Lastly, on the net income, the net profit attributable to Omantel has increased to 60.1% to reach around OMR 58.6 million, primarily reflecting a higher contribution from Zain, including the strategic investment gains. Moving to the domestic performance. The domestic performance revenue has grown almost by 11.2%, mainly supported by the growth seen in the telecom revenue of $25.1 million, and the ICT and emerging tech has grown up to $10.7 million.

Speaker #2: Revenue has shown a growth of 5.7%, reaching 1.7 billion, supported by domestic growth and solid contribution from Zain operations and growth verticals.

Speaker #2: On the EBITDA level, increased by 3.9% to reach 551.1 million, which also shows reflection of solid operational performance across major Zain markets. Lastly, on the net income, the net profit attributable to Omantel has increased by 60.1% to reach around 58.6 million, primarily reflecting a higher contribution from Zain, including the strategic investment gate.

Speaker #2: Now, moving to the domestic performance—the domestic performance revenue has grown by almost 11.2%, mainly supported by the growth seen in telecom revenue of 25.1 million, and ICT and emerging tech have grown up to 10.7 million.

Speaker #2: EBITDA has witnessed a decrease, mainly due to higher impairment provisions related to enterprise receivables in H1 2026, and it's expected to improve in the second half.

[Company Representative] (Omantel): The EBITDA has witnessed an increase mainly due to higher impairment provisions related to enterprise receivables in H1 2026, and it's expected to improve in the second half. On the net profit, decline by $2.9 million, primarily reflecting higher depreciation from ongoing investments and lower OpEx. Moving to Omantel domestic revenue. Zooming a little bit on the revenue components, we can see how the core telecom revenue has increased. We can see across all sub-segments in the core telecom mobile, $6.8 million gross, declines around $600K, the wholesale around $17.2 million, and the ICT around $10.7 million. Moving at the profitability, looking at the gross profit from core operation year-on-year has increased mainly on the back of the growth seen in revenue from fixed broadband and the enterprise connectivity revenues and as well the wholesale revenues.

Speaker #2: On the net profit, it declined by $2.9 million, primarily reflecting higher depreciation from ongoing investments and lower EBITDA. Now, moving to Omantel domestic revenue, zooming in a little bit on the revenue components, we can see how the core telecom revenue has increased.

Speaker #2: We can see across all subsegments in the core telecom: mobile, fixed, 6.8 million; growth defines this, around 610; the wholesale, around 17.2 million; and the ICT, around 10.7.

Speaker #2: Moving on to profitability, looking at the gross profit from core operations year-on-year, it has increased mainly on the back of the growth seen in revenue from fixed broadband and enterprise connectivity revenues, as well as wholesale revenues.

Speaker #2: The gross margin on ICT as well has increased on account of infrastructure as a service, security as a service, and the Oracle Cloud services.

[Company Representative] (Omantel): The gross margin on ICT as well has increased on account of Infrastructure as a Service and Security as a Service, and the Oracle Cloud services. On the core telecom EBITDA, we can see that it has decreased and it's mainly as mentioned earlier, it's on the back of the increase in impairment provisions, primarily in enterprise unit receivables. It's also expected to improve in the second half. On the core telecom financials, we can see that, and as earlier addressed, all the sub-segments under core telecom has shown growth. The wholesale revenue has increased by $17.2 million. The fixed revenue has grew by $6.8 million, supported by continued growth in fixed broadband and enterprise data circuits, as well as the mobility revenue grew by $900K with a postpaid growth more than offsetting the decline in prepaid revenue.

Speaker #2: On the core telecom EBITDA, we can see that it has decreased, and it's mainly, as mentioned earlier, on the back of the increase in impairment provisions, primarily in the enterprise unit's receivables. That is also expected to improve in the second half.

Speaker #2: On the core telecom financials, we can see that, as addressed earlier, most or all of the subsegments under core telecom have shown growth.

Speaker #2: The wholesale revenue has increased by 17.2 million, the fixed revenue has grew by 6.8 million, supported by continued growth in fixed broadband and enterprise data circuits, as well as the mobility revenue grew by 900K, with a postpaid growth more than offsetting the decline in prepaid revenue, and as mentioned earlier, the EBITDA impact is coming because of the impairment provisions in the enterprise receivables.

[Company Representative] (Omantel): As mentioned earlier, the EBITDA impact is coming because of the impairment provisions in the enterprise receivables. On the key core telecom statistics, we can see that the total subscriber has increased by almost 65K year-on-year, driven primarily by a strong growth in the M2M by 62,000 subscribers, reflecting our continued growth in the IoT and enterprise connectivity services. As well, we have seen growth in the postpaid, or the key services of the postpaid service from 747 to 784, as well as sustaining our competitive position and net subscriber growth despite the intensified price split market dynamics supported by strong retention and successful upselling. Moving to the fixed.

Speaker #2: On the key core telecom statistics, we can see that the total subscriber base has increased by almost 65,000 year-on-year, driven primarily by a strong growth in the end-to-end segment by 62,000 subscribers, reflecting our continued growth in the IoT and enterprise connectivity services.

Speaker #2: As well, we have seen growth in the postpaid key or the key services of the postpaid service from 747 to 784. As well, sustaining our competitive position and net subscriber growth despite the intensified price-led market dynamics, supported by strong retention and successful upselling.

Speaker #2: Moving to the fixed subscribers, the fixed subscribers have also posted a growth of 1.5%. Both the subscribers and the ARPU have increased from 28.6 to 29.8, mainly driven by the migration of customers to higher plans and net additions.

[Company Representative] (Omantel): The fixed subscribers has also posted a growth of 1.5%, both on the subscribers and the ARPU as well has increased from 28.6 to 29.8, mainly to be driven by the migration of customers to higher plans and net new additions. The last segment of the revenue we have on the ICT. The growth in ICT is primarily coming from the Otech business attributed to increase coming from Oracle and Security as a Service and Infrastructure as a Service. While gross margin varies across the business segment, the margin increase is supported by growth coming from increase in revenue from Otech business and the Infoline call center, as well as the increase in the EBITDA coming from higher gross margin supported by stable OpEx costs. Moving to the CapEx. Omantel has invested around $61 million in CapEx compared to $59 million in 2025.

Speaker #2: The last segment of the revenue we have is the ICT. The growth in ICT is primarily coming from the OTEC business, attributed to increases coming from Oracle and security as a service, and infrastructure as a service, while gross margin varies across the business segment.

Speaker #2: The margin increase is supported by growth coming from an increase in revenue from the OTEC business and the inFLUENCE call center, as well as the increase in EBITDA coming from a higher gross margin, supported by stable OPEX costs.

Speaker #2: Moving to the CAPEX, Omantel has invested around $61 million in CAPEX compared to $59 million in 2025, and the CAPEX-to-revenue ratio has stood at 12%, compared to 16.3%.

[Company Representative] (Omantel): The CapEx to revenue ratio has stood at 12% comparing to 16.3%. The majority of the CapEx continues to be directed to 5G network deployment and the expansion of the digital infrastructure. Going forward, Omantel remains to be focused on disciplined and growth-oriented investments, prioritizing critical projects that advances 5G rollouts and scaling our CT capabilities and accelerating the digital transformations across the business. Moving to the cash flow slide. The H1 is typically influenced by working capital movement and the timing of investments and financing activities. The operating cash flow has increased around $19.7 million on account of reduced cash outflow on payables by $19.7 million, which was partially offset by the increase in receivables by $8.6 million.

Speaker #2: The CAPEX continues to be a majority of the CAPEX is continues to be directed to 5G network deployment, and the expansion of the digital infrastructure, going forward, Amantel remains to be focused on disciplined and growth-oriented investments, prioritizing critical projects that advances 5G rollout and scaling ICT capabilities, and accelerate the digital transformations across the business.

Speaker #2: Moving to the cash flow slides, the first half is typically influenced by working capital movement and the timing of investments and financing activities. The operating cash flow has increased by around $19.7 million, on account of reduced cash outflow on payables by $19.7 million, which was partially offset by the increase in receivables by $8.6 million.

Speaker #2: Similarly, the cash outflows from investing activities have increased by 6.2 million, mainly reflecting the impact of the additional interim dividends from JM received in the prior year, which was partially offset by the higher which was partially offset by the higher investments associated in subsidies.

[Company Representative] (Omantel): Similarly, the cash outflows from investing activities have increased by $6.2 million, mainly reflecting the impact of the additional interim dividends from du received in the prior year, which was partially offset by the higher investments associated in subsidiaries. Despite that, the free cash flow improved by EUR 13.6 million year-on-year and remains supportive of our ongoing investment economics. Lastly, on the balance sheet, this slide provides a snapshot of our current position in terms of gross debt composition and our repayment profiles, including bank borrowings and both associated interest obligations. The leverage stood at 3.3 as of 30 June 2026 compared to 3.2 last time reported in the 31 December 2025, reflecting the continued investments in growth while maintaining a resilient balance sheet. We continue to maintain a strong liquidity position of approximately around $236 million in liquidity, including $62 million in cash and cash equivalents.

Speaker #2: Despite that, the free cash flow improved by $13.6 million year-on-year and remains supportive of our ongoing investment plans. Lastly, on the balance sheet, this slide provides a snapshot of our current position in terms of gross debt, composition, and our repayment profiles, including bank borrowings, bonds, and associated interest obligations.

Speaker #2: The leverage stood at 3.3 as of 30th June 2026, compared to 3.2 last time reported on 31st December 2025, reflecting the continued investments in growth while maintaining a resilient balance sheet.

Speaker #2: We continue to maintain a strong liquidity position of approximately $200.36 million in liquidity, including $62 million in cash and cash equivalents.

Speaker #2: And we continue to maintain our credit ratings of Ba1 with a stable outlook from Moody's, and BBB with a stable outlook from Fitch Ratings, underscoring the resilience of our financial profile and disciplined approach to capital management.

[Company Representative] (Omantel): We continue to maintain our credit ratings of Ba1 with a stable outlook from Moody's and BBB with a stable outlook from Fitch Ratings, underscoring the resilience of our financial profile and disciplined approach to capital management. This brings us to the end of our presentation for the H1 performance. Now we will allow to open the session for the Q&A. If anyone has any questions, you may use the hand raise facility, or you can put your question in the chat box. Thank you.

Speaker #2: This brings us to the end of our presentation. For the H1 performance and now we can we will allow to open the session for the Q&A.

Speaker #2: If anyone has any questions, you may use the hand-raise facility, or you can put your question in the chat. Thank you.

Speaker #1: Thank you, Alisha. So, the floor is open. You may ask any questions by using the raise hand option or the chat box. Yes, we have Dan.

Ghassan Khamis Al Hashar: Thank you, Aisha. The floor is open. You may ask any question by using the Raise Hand option or the chat box. Yes, we have Dan. Just give us few seconds, and we'll get you in by order.

Speaker #1: There you go. Just give us a few seconds, and we'll get you in by order.

Speaker #3: Dan, you can unmute yourself. Thank you.

[Company Representative] (Omantel): Dan, you can unmute yourself.

Ghassan Khamis Al Hashar: Fine, Mark. Just hold on with us for a moment, please. Thank you.

Speaker #1: I'm not. Yes, hold on with us for a moment, please. Thank you. Yeah. I think by the time of the organizers, we see a question in the chat.

[Company Representative] (Omantel): Yeah. I think by the time they organize this, we see a question on the chat. Can you explain the number of subscribers shown as whether it is an active subscribers? Yes. The numbers what we are reporting are active subscribers as of June 2026. Just for you all to give a flavor and further explain what Aisha mentioned earlier. In case of mobility, our base stands at around 3.2 million and fixed is around 413. So let me give you a flavor first on the postpaid. On the postpaid compared to the previous period, we have grown by close to 15,000 subscriber base, and that is reflected in good growth in our postpaid revenue year-on-year. While the prepaid base has gone down, and that is reflected in the prepaid revenue.

Speaker #1: Can you explain if the number of subscribers shown refers to active subscribers? Yes, the numbers we are reporting are active subscribers as of June 2026.

Speaker #1: Just to give you all a flavor and to further explain what Aisha mentioned earlier, in the case of mobility, our base stands at around 3.2 million.

Speaker #1: And fixed is around 413. So, let me give you a flavor first on the postpaid. On the postpaid, compared to the previous period, we have grown by close to 15,000 subscribers, and that is reflected in good growth in our postpaid revenue year-on-year.

Speaker #1: While the prepaid base has gone down, and that is reflected in the prepaid revenue, a major part of that shortfall in the prepaid revenue is offset by growth in the postpaid revenue.

[Company Representative] (Omantel): A major part of that shortfall in the prepaid revenue is offset by the growth in the postpaid revenue.

Speaker #1: You managed to serve anything?

Ghassan Khamis Al Hashar: You managed to solve anything?

Speaker #2: I think we can have the questions in the chat box for the meantime, as for some reason the mic facility is not turning on. Could you please provide some color on the 3% question or the quarter-on-quarter growth in postpaid, as raised by Joyce from United?

[Company Representative] (Omantel): I think we can have the questions on the chat box for the meantime. For some reason, the mic facility is not turning on. Could you please provide some color on the 3% quarter-on-quarter growth in postpaid question raised by George from United States?

Speaker #1: Postpaid are poor, yeah. So, Dakar. Yeah. So postpaid are poor, actually, for the first half. If you see that, it stands at around 17.

Ghassan Khamis Al Hashar: Postpaid ARPU, yeah. Sudhakar?

[Company Representative] (Omantel): Yeah. Postpaid ARPU actually for the H1, if you see that, it stands at around 17. That is a marginal drop compared to last year. Yes, but on a quarter-on-quarter basis, there has been a marginal growth in ARPU compared to the Q1. That growth is actually contributed by two things. One, growth in our net additions. Net additions are primarily concentrated towards the plans where we were able to get subscribers on the medium to high-end plans. That is one reason for the growth in the quarter-on-quarter ARPU. In addition to that, the value-added services revenue also for the quarter is marginally higher compared to the previous quarter. The growth in these two numbers actually ended up showing a marginal growth in our postpaid ARPU.

Speaker #1: That's a marginal drop compared to last year. Yes, but on a quarter-on-quarter basis, there has been a marginal growth in ARPU compared to the first quarter.

Speaker #1: And that growth is actually contributed by two things. One, growth in our net additions. Net additions are primarily concentrated in plants where we were able to get subscribers on the medium to high-end plans.

Speaker #1: That is one reason for the growth in the quarter on quarter ARPU. And in addition to that, our the value added services revenue also for the quarter is marginally higher compared to the previous quarter.

Speaker #1: So, the growth in these two numbers actually ended up showing a marginal growth in our postpaid ARPU.

Speaker #2: Dan, can you post your question in the chat?

[Company Representative] (Omantel): Dan, can you post your question in the chat box?

Speaker #1: Yes, go down. There you go. There you go.

Ghassan Khamis Al Hashar: Yes, no, Dan. They will not hear you. Yep.

Speaker #2: Okay, question from Dan. Could you help us understand the margin dynamics of the domestic business a bit better? You quantify the enterprise receivables impact, which is expected to reduce in H2.

[Company Representative] (Omantel): Okay, question from Dan. Could you help us understand the margin dynamics of the domestic business a bit better? You quantify the enterprise receivables impact, which is expected to reduce in H2. Were there other factors at play? For example, you saw strong growth in wholesale, particularly hubbing and also investments in operations.

Speaker #2: Were there other factors at play? For example, you saw strong growth in wholesale, particularly in hubbing, and also investments in operations?

Speaker #1: I believe, Dan, to look at the first point, when you mentioned the enterprise collections—yes, as Aisha clearly presented, this will, of course, be recovered during the second half of the year.

Ghassan Khamis Al Hashar: I believe, Dan, to look at the first point when you mentioned the enterprise collections. Yes, as Aisha clearly presented, this will be, of course, recovered during the second half of the year, and the level of impairment was higher. Therefore, you have seen the domestic EBITDA net profit impacted for the first half of this year. But we believe that the collections are going to be actively managed in the second half of the year. And we are expecting, of course, the levels of impairment will be much lower than the levels we are seeing at the moment. When it comes to the second part, I believe, Sudhakar, maybe the revenue mix and, of course, if you stay in that box, Aisha.

Speaker #1: The level of impairment was higher; therefore, you have seen the domestic EBITDA and net profit impacted for the first half of this year.

Speaker #1: But we believe that the collections are going to be actively managed in the second half of the year, and our impairment would be much lower than the levels we are seeing at the moment.

Speaker #1: When it comes to the second part, I believe Sudakar—maybe the revenue mix—and of course, if you stay in that box, Aisha. Yeah.

[Company Representative] (Omantel): Yes. So to answer this question, let's focus on the revenue mix a bit. On the revenue on the fixed business side, we grew by close to 8.3%. This growth is primarily coming from fixed broadband revenue. Like all the previous quarters, we continue to have a strong growth momentum in the fixed broadband revenue. In case of mobility, as I was explaining earlier, there is a growth of close to 0.9%, mainly supported by growth coming from the postpaid revenue. It is important to note that in spite of the competitive pressure in the prepaid market, excluding value-added services revenue on a quarter-on-quarter basis, we have been able to maintain our prepaid revenue. So prepaid revenue is continuing. While it's competitive, it has shown signs of stability in terms of revenues, at least for Omantel. Now coming to the wholesale revenue. Wholesale revenue grew by close to 17.3%.

Speaker #1: Yes.

Speaker #3: So, to answer this question, let's focus on the revenue mix a bit. On the revenue on the fixed business side, we grew by close to 8.3%.

Speaker #3: This growth is primarily coming from fixed broadband revenue. Like all the previous quarters, we continue to have strong growth momentum in the fixed broadband revenue.

Speaker #3: In the case of mobility, as I was explaining earlier, there is a growth of close to 0.9%, mainly supported by growth coming from postpaid revenue.

Speaker #3: It is important to note that in spite of the competitive pressure in the prepaid market, excluding value added services revenue, on a quarter on quarter basis, we have been able to maintain our prepaid revenue.

Speaker #3: So, prepaid revenue is continuing while it remains competitive. It has shown signs of stability, at least in terms of revenues for Omantel. Now, coming to the wholesale revenue—it grew by close to 17.3%.

Speaker #3: Yes, a significant part of the growth has come from the hubbing revenues, like what you have seen in the previous quarters. While hubbing revenue, in terms of top line, is a significant growth.

[Company Representative] (Omantel): Yes, a significant part of the growth has come from the hubbing revenues, like what you have seen in the previous quarters. While the hubbing revenue, in terms of top line, it's a significant growth. In terms of its impact on the margin, that growth adds around 4%, comes with a gross margin of 4%. But besides hubbing, the growth in wholesale revenue has come from the other segments also, namely capacity in terms of its contribution to the gross margin. And besides that, our growth coming from reseller revenues, whom we continue to support from a network perspective. On that side, the resellers also have shown a growth in revenue, which has added to the wholesale number. That's on the revenue mix.

Speaker #3: In terms of its impact on the margin, that growth adds around 4% and comes with a gross margin of 4%. But besides hubbing, the growth in wholesale revenue has come from the other segments also.

Speaker #3: Namely, capacity in terms of its contribution to the gross margin. And besides that, our growth is coming from reseller revenues, whom we continue to support from a network perspective.

Speaker #3: On that side, the resellers also have shown a growth in revenue, which has added to the wholesale number. That's on the revenue mix. And like Sheikh Hassan mentioned, the growth in revenue while it was pretty positive on the gross margin side, on the gross margin side, for the core telco, it went up by 2%.

[Company Representative] (Omantel): Like Shekhar mentioned, the growth in revenue, while it was pretty positive on the gross margin side, on the gross margin side for the core telco, it went up by 2%. That positive impact didn't translate to its full impact on EBITDA, primarily because of two key reasons. One, impairment provision, which was already explained, and that impairment provision has primarily come from the business segment. In the business segment, year-on-year, because of the increase in the size of billing, we also mentioned in the revenue, we have grown in enterprise data circuits. That has also reflected as a higher increase in our receivables. We believe this is a matter of timing, and this should even out in H2.

Speaker #3: But then that positive impact didn't translate into its full impact on EBITDA, primarily because of two key reasons. One, impairment provision, which was already explained.

Speaker #3: And that impairment provision has primarily come from the business segment. In the business segment, year on year, because of, one, because of the increase in the size of billing, we have also mentioned in revenue, we have grown in enterprise data circuits.

Speaker #3: That has also been reflected as a higher increase in our receivables. But we believe this is a matter of timing, and this should even out in the second half.

Speaker #3: This is a case that we have observed previously, also last year, where the collection rate tends to go up in the second half.

[Company Representative] (Omantel): This is the case which we have observed previously also last year, where the collection rate tends to go up in H2. So impairment provision has increased by close to 3.3 million year-on-year. That's one reason why our EBITDA is high. Our operating and maintenance cost also went up by close to 2.8 million, primarily coming from increase in IT costs. So EBITDA decrease is primarily coming from some of these elements of increase in the OpEx cost.

Speaker #3: So, impairment provision has increased by close to $3.3 million year on year. That's one reason why our EBITDA is high. Our operating and maintenance cost also went up by close to $2.8 million, primarily coming from an increase in ID costs.

Speaker #3: The EBITDA decrease is primarily coming from some of these elements of increase in the OPEX cost.

Speaker #1: Okay. I believe the unmute feature is now accessible. But we will go ahead and continue answering the questions in the chat box. Once we finish those, we will allow the 'raise hand' feature.

Ghassan Khamis Al Hashar: Okay, I believe the unmute feature is now accessible, but we will go ahead and continue answering the questions in the chat box, and once we finish those, we will allow the raise the hand feature for any questions later. We continue with the coming question. Can you read me a bit more, please?

Speaker #1: For a question, any questions later. So we continue with the coming question. Can you remove the emoji, please? From Kaushik: Domestic revenue has increased by 11%, but gross margin has fallen to 48% in first half '26 compared to 52% a year back.

[Company Representative] (Omantel): Yes.

Ghassan Khamis Al Hashar: From Kaushik. Domestic revenue has increased by 11%, but gross margin has fallen to 48% in H1 2026, compared to 52% a year back. So which slide are you referring to, Aisha?

Speaker #1: So, which slide is this that you are referring to, Aisha?

Speaker #2: Talking about the gross profit and gross margin.

[Company Representative] (Omantel): Something about the gross margin.

Ghassan Khamis Al Hashar: That is the gross margin. Correct. Sudhakar?

Speaker #1: That's the gross margin, correct. So, Sudakar.

Speaker #3: Yeah. See, this is quite understandable. I think if you look at the absolute increase in the gross margin, the increase in gross margin is coming from both the core telco and it is also coming from the ICT segment.

[Company Representative] (Omantel): Yeah. See, this is quite understandable. I think if you look at the absolute increase in the gross margin, the increase in gross margin is coming from both the core telco, and it is also coming from the ICT segment. To answer your question precisely on the gross margin, let us focus on the ICT and the new tech, where we have got an increase of absolute margin of close to OMR 4.5 million, backed up by a growth in revenue of close to OMR 16 million. What you have to understand is that in ICT, you have got a revenue mix where the margin profile kind of varies from one segment to another segment. Just to explain the Otech business a bit more. Otech has got different product profiles. We are talking about a data center, which focuses on the colocation part.

Speaker #3: But to answer your question precisely on the gross margin, let's focus on the ICT and the new tech, where we have seen an increase in absolute margin of close to $4.5 million, backed up by revenue growth of nearly $16 million.

Speaker #3: But what you have to understand is that in ICT, you have a revenue mix where the margin profile varies from one segment to another.

Speaker #3: Just to explain the OTEC business a bit more: OTEC has different product profiles. For example, we're talking about the data center, which focuses on the co-location part.

Speaker #3: Then we have infrastructure as a business. And then we have software as a software service. And then the cloud partnerships. Now, let's pick up these two segments where the growth in revenue has come year on year, mainly on the software as a service and the cloud partnerships which we have with primarily with Oracle.

[Company Representative] (Omantel): Then we have Infrastructure as a Service, and then we have Software as a Service, and then the cloud partnerships. Let us pick up these two segments where the growth in revenue has come year on year, mainly on the Software as a Service and the cloud partnerships which we have primarily with Oracle. These two product segments, relative to, say, probably the colocation segment, in terms of its gross margin contribution is lower. We are talking about something close to 8% to 9% margin on these segments. Whereas relatively on the infra side, the margins are higher. So while from an absolute margin perspective, we have grown, the percentage margin will show a contraction because of the revenue mix itself.

Speaker #3: Now, these two product segments, relative to, say, probably the co-location segment in terms of their gross margin contribution, are lower. We're talking about something close to 8% to 9% margin on these segments, whereas, relatively, on the infra side, the margins are higher.

Speaker #3: So, while from an absolute margin perspective we have grown, the percentage margin will show a contraction because of the revenue mix itself. And you would appreciate that ICT and new tech services have this kind of margin profile.

[Company Representative] (Omantel): You would appreciate that ICT and new tech services has this kind of margin profile, and your gross margin percentage will vary depending upon where the revenue growth is going to come. On core telco, the margin, I would say, is more or less stable. On core telco our gross margin was close to 51.2% compared to 54% last year. That primarily also shows the mix of revenue which I was explaining earlier, partly coming from wholesale. As you continue to grow your top line on wholesale, where we have got hubbing contributing around 16 million of that growth, which adds in the gross margin only to the extent of 4%, that obviously would have an effect on the overall gross margin. But excluding probably hubbing, our gross margin is pretty stable.

Speaker #3: And your gross margin percentage will vary depending upon where the revenue growth is going to come from. On core telco, the margins, I would say, are more or less stable.

Speaker #3: On core telco, our gross margin was close to 51.2%, compared to 54% last year. That primarily also shows the mix of revenue, which I was explaining earlier, partly coming from wholesale. As you continue to grow your top line on wholesale, we've got hubbing contributing around $16 million of that growth, which adds in the gross margin only to the extent of 4%.

Speaker #3: That obviously would have an effect on the overall gross margin. But excluding, probably, hubbing, our gross margin is pretty stable. In fact, I would say that our gross margin has improved on the core telco, excluding the hubbing revenue, year on year.

[Company Representative] (Omantel): In fact, I would say that our gross margin has improved on the core telco, excluding the hubbing revenue year on year.

Speaker #2: Thank you. Sudakar, to Sandesh's question in the chat box, could you provide your full-year 2026, 2027 capex guidance, including—sorry, I don't know what this word is here—but the expected spend between 5G deployment and the OTEC?

[Company Representative] (Omantel): Thank you, Sudhakar. To Sandesh question on the chat box, could you provide your full year 2026, 2027 CapEx guidance, including-- sorry, I don't know what is this word you put here. They expect to spend between 5G deployment and the Ooredoo. Additionally, could you provide some color on your medium-term strategy and growth plans for the Ooredoo business, including the key areas of the investments?

Speaker #2: Additionally, could you provide some color on your medium-term strategy and growth plans for the OTEC business, including the key areas of the investments?

Speaker #1: Well, to look at, of course, our capex levels for this year compared to last year—of course, Aisha showed us that slide. Clearly, at the levels we are in, looking at, of course, 16.3% capex to revenue in 2025 and about 12% in 2026.

Ghassan Khamis Al Hashar: Well, to look at, of course, our CapEx levels for this year compared to last year, of course, Aisha showed us that slide clearly at the levels we are in, looking at, of course, 16.3% CapEx to revenue in 2025 and about 12% in 2026. However, as an absolute investment amount for the H1 of the year, we are seeing an increase. So we are expecting also to catch up during the H2 of the year. However, year on year, we are expecting to be at around the same level of CapEx investments, in general, being at the high teens level, compared to CapEx to revenue this year and compared to last year.

Speaker #1: However, as an absolute investment amount for the first half of the year, we are seeing an increase. So, we are also expecting to catch up during the second half of the year.

Speaker #1: However, year on year, we are expecting to be at around the same level of capex investments in general, being at the high teens level for capex to revenue this year compared to last year.

Speaker #1: Of course, the revenue mix and the growth we are seeing, it's coming from. That will be a little bit you will have to take out mainly the noise that's coming from the non-telco revenue streams.

Ghassan Khamis Al Hashar: Of course, the revenue mix and the growth we are seeing it coming from, that will be a little bit. You will have to take out mainly the noise that is coming from the non-telco revenue streams for you to get to the exact growth figure in CapEx to revenue as we move forward. When it comes to the investments in our core telco, of course, the investment in 5G, that is the highest priority, and that is going to be the majority of the investments directed towards 5G and new technologies as we move forward to deliver best-in-class services to our customers. When we look, of course, towards the deployment in Ooredoo in general, of course, before going to Ooredoo, looking at Omantel, there is also the investments towards the digital platforms.

Speaker #1: For you to get to the exact growth figure in capex to revenue as we move forward. When it comes to the investments in our core telco, of course, the investment in 5G—that's the highest priority.

Speaker #1: And that's going to be the majority of the investments directed towards 5G and new technologies as we move forward to deliver best-in-class services to our customers.

Speaker #1: When we look, of course, towards the deployment in OTEC in general, of course, before going to OTEC, looking at Omantel, there is also the investment towards the digital platforms.

Speaker #1: That also will require some sort of attention from Omantel again, to expand our services beyond telco and connectivity towards digital services and solutions. Now, coming to OTEC, as we've highlighted in previous earnings updates and meetings, it will look at certain verticals. The first is data centers and cloud solutions.

Ghassan Khamis Al Hashar: That also will require some sort of attention from Omantel again to expand our services beyond telco and connectivity towards digital services and solutions. Now, coming to Ooredoo, as we have highlighted in previous earnings updates and meetings, that if we look at certain verticals, the first is data centers and cloud solutions, the second is cybersecurity, and the third is the Internet of Things, smart cities, and the fourth is being an active system integrator in Oman. Now, if we look at these areas, in addition to that, of course, Ooredoo is expanding its partnerships with different players in the country, being other Omani companies and global players as well. When it comes to Ooredoo, the major sort of CapEx we will be seeing, it is of course in the area of expanding our data centers and cloud hosting services as we move on.

Speaker #1: The second is cyber security. The third is the Internet of Things and smart cities. The fourth is being an active system integrator in Oman.

Speaker #1: Now, if we look at these areas, in addition to that, of course, OTEC is expanding its partnerships with different players in the country, including other Omani companies and global players as well.

Speaker #1: When it comes to OTEC, the major sort of CAPEX we will be seeing is, of course, in the area of expanding our data centers and cloud hosting services as we move on.

Speaker #1: So, these are, I would say, the lights we can shed on the OTEC business and the key areas of investment.

Ghassan Khamis Al Hashar: So these are, I would say, the lights we can shed on the Ooredoo business and the key areas of investment.

Speaker #2: Thank you, Mr. Ghassan. Moving to another question from Kaushik. Can you give some color on the enterprise provisions? The provisions were for—were they for business-to-business or business-to-government?

[Company Representative] (Omantel): Thank you. Bassam, moving to another question from Kaushik. Can you give some color on the enterprise provisions? The provisions, were they for B2B or B2G, and was it on account?

Speaker #2: And was it—was it on account?

Speaker #1: Thank you, Kaushik. Well, actually, to look at the enterprise provisions, it's actually a bit of it's both the to B and B to G.

Ghassan Khamis Al Hashar: Thank you, Kaushik. Well, actually, to look at the enterprise provisions, it is both B2B and B2G, but this is coming, of course, as a result, even though the enterprise customers, they are sort of low risk in nature, but our IFRS and ECL modeling determined that we should be prudent and prepare for provisioning on these. This is not a write-off to answer your question. No write-offs. Of course, we made it clear in the presentation that we are expecting better recovery in the coming quarters as we approach the end of the year. There are some enterprise customers that have a budget cycle, so from time to time, there will be required some set of approvals. We believe it is only a timing issue, and we will keep updating you regularly in the coming quarters as we approach year-end.

Speaker #1: But this is coming, of course, as a result. Even though the enterprise customers, they are sort of low risk in nature, but of course, our IFRS and ECL modeling, of course, determines that we should be prudent and prepare for provisioning on these.

Speaker #1: So this is not a write-off, to answer your questions. No write-offs. Of course, we made it clear in the presentation that we are expecting better recovery in the coming quarters as we approach the end of the year.

Speaker #1: There are some enterprise customers that have a budget cycle. So, from time to time, there will be required some set of approvals. So we believe it's only a timing issue.

Speaker #1: And we will keep updating you regularly in the coming quarters as we approach year-end. However, we are actively working on recovering these receivables to ensure that our provisioning levels are at a sort of acceptable position.

Ghassan Khamis Al Hashar: However, we are actively working on recovering these receivables to ensure that our provisioning levels are at sort of an acceptable position. Let us move to the next question.

Speaker #1: Let's move to the next question.

Speaker #2: Thank you. The next question is again from Joyce. While Zain has been constantly raising its dividend, Omantel's dividend has remained stable over the last seven years.

[Company Representative] (Omantel): Thank you. The next question again from Joyce. While Zain has been constantly raising its dividend, Omantel dividends remain stable over the last seven years. Now that we have more visibility on Zain's dividend and also on the back of the special dividend in H1 2026, should we expect any change in Omantel's dividend payout for the year 2026?

Speaker #2: Now that we have more visibility on Zayn's dividend, and also on the back of the special dividend in the first half of 2026, should we expect any change in Omantel's dividend payout for the full year 2026?

Speaker #1: Well, Joyce, to maybe explain Zayn's decision on the exceptional dividends, this was not in relation to the first—of course, what was announced last year.

Ghassan Khamis Al Hashar: Well, Joyce, to maybe explain on the Zain's decision on the exceptional dividends, this was not in relation to the first, of course. What was announced last year, this is exceptionally done, as you highlighted, for H1 2026, and as a result of the financial unrealized gains, which was achieved through some investments, and Zain has announced those. It was the investments made in SpaceX and xAI. Those who exceptionally went up in its valuations from the beginning of the year to the end, you are aware that there was an IPO, but it is not results that is coming from pure operations. Therefore, they made it clear that they will continue their certified dividends policy as they move forward.

Speaker #1: This is exceptionally done, as you highlighted, for the first half of 2026. And as a result of the financial unrealized gains, which were achieved through some investments—and Zain has announced those—it was investments made in SpaceX and xAI.

Speaker #1: So those, exceptionally, went up in their valuations. From the beginning of the year to year-end, you are aware that there was an IPO. But it's not results that are coming from pure operations.

Speaker #1: Therefore, Zayn made it clear that they will continue their 35% dividends policy as they move forward. So we will go back to the same level of dividend payout unless, of course, there comes any opportunities for any monetization in any assets that are there in both Zayn and Omantel.

Ghassan Khamis Al Hashar: So we will go back to the same level of dividends payout unless, of course, there comes any opportunities for any monetization in any assets that are there in both Zain and Omantel. When it comes to your second part of the question, which is the payout of Omantel for the financial year 2026, I believe that is a shareholder's decision that may come at a later stage, which is Q1 of next year. However, what we are planning to utilize or use of these funds that are coming from the dividends is mainly to prepay any debt positions that we have at this stage, which will also add good value to our shareholders. Looking also at moving forward from here, in addition to that, I believe that I want to make it clear because there is always confusion.

Speaker #1: Regarding the second part of your question, which is the payout of Omantel for the financial year 2026, I believe that is a shareholder's decision that may come at a later stage.

Speaker #1: Which is Q1 of next year. However, what we are planning to utilize or use these funds for, which are coming from the dividends, is mainly to sort of prepay any debt positions that we have at this stage, which will also add good value to our shareholders.

Speaker #1: Looking also at moving forward from here, in addition to that, I believe that I want to make it clear, because there is always confusion.

Speaker #1: The dividend payout does not impact the consolidated financial results in any way because the consolidated financials are all share of profits from all our, of course, and subsidiaries put together, and attributable to the shareholders of Omantel.

Ghassan Khamis Al Hashar: The dividend payout does not impact the consolidated financial results in any way because the consolidated financials are all share of profits from all our opcos and subsidiaries put together and attributable to the shareholders of Omantel. The dividends are purely an addition to our cash flows and to our domestic performance. I just wanted to distinguish between the both. If we move to the next question.

Speaker #1: The dividends are purely an addition to our cash flows and to our domestic performance. So I just wanted to distinguish between the two. If we move to the next question—yes.

Speaker #2: I believe these are all.

[Company Representative] (Omantel): Yes, please, these are all the-

Speaker #1: This is the last question on that, and I believe we have solved the mic issue. So, you can raise your hand and ask any questions if some parts were not answered already.

Ghassan Khamis Al Hashar: This is the last question on that. I believe we solved the mic issue, so you can raise the hand and ask any questions if some parts were not answered already. Okay. If there are no more questions, I would like to thank all the participants for joining us today and, of course, looking forward to meet again in the coming quarters and to give you more updates on Omantel growth opportunities as we move forward. I will move it now to Aisha.

Speaker #1: Okay. If there are no more questions, I would like to thank all the participants for joining us today. And, of course, we look forward to meeting again in the coming quarters.

Speaker #1: And to give you more updates on Omantel's growth opportunities as we move forward, I'll now hand it over to Aisha.

Speaker #2: Thank you very much, Mr. Ghassan. Thank you to our analysts and investors for joining us for the H1 performance update. You can find the presentation on the website.

[Company Representative] (Omantel): Thank you very much, Mr. Ghassan. Thank you to our analysts and investors for joining us the H1 performance update. You can find the presentation on the website. If there is any additional questions or queries, our email is available to respond. I would like to thank the senior management of finance for joining us today, and we look forward to giving you the nine months update in November. Thank you very much for joining us this call.

Speaker #2: If there are any additional questions or queries, our email is available to respond. Also, I would like to thank the senior management of Finance for joining us today.

Speaker #2: And we look forward to giving you the nine-month update in November. Thank you very much for joining us on this call.

Ghassan Khamis Al Hashar: Thank you.

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Q2 2026 Oman Telecommunications Company SAOG Earnings Call

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