Oman Telecommunications -Equity Report -15-05-2012

12-Month Fair Value: OMR 1.450
Recommendation: Accumulate – Risk level: 3
Last Close (14 May 2012): OMR 1.287

Omantel’s 1Q2012 results broadly in line with expectations. Revenues declined by 0.4% year-over-year (YoY) to OMR 111.1 million, 2% above our forecast but 1% below consensus estimates. 1Q2011 revenues included non-recurring wholesale revenues of OMR 9 million; excluding this, the 1Q2012 revenues actually grew by 8% YoY. EBITDA grew by 1% YoY to OMR 57.9 million (3% above our forecast), an EBITDA margin of 52% versus 51% in 1Q2011. Net profit grew by 13% YoY to OMR 29.1 million largely due to decline in depreciation and other expenses.

We maintain an overall positive view. Overall, we find the results to be broadly in line with our expectations and like the operator’s healthy domestic mobile segment performance. However, we remain cautious on WTL, and will be watching closely for its expected recovery. For now we maintain our valuation for the stock at OMR 1.450 per share (13% upside), which implies an “Accumulate” recommendation.