Muscat – Moody’s Ratings has upgraded Omantel’s long-term corporate family rating to Ba1 from Ba2, the probability of default rating to Ba1-PD from Ba2-PD, and the Baseline Credit Assessment (BCA) to ba2 from ba3.
Moody’s said that its rating action reflects Omantel’s stable financial performance amid structurally intensified competition since 2022, strong credit metrics that are more commensurate with the ba2 BCA, and improved liquidity.
‘The rating action also incorporates the company’s track record of prudent financial policy and calculated development strategy, as well as efforts to keep leverage under control. At the same time, the stable outlook reflects our expectations that material improvements in the company’s standalone credit quality are unlikely over the next two years,’ Moody’s said.
Moody’s noted that Omantel’s rating is also supported by its prudent development strategy and financial policy. ‘This is demonstrated by the strategic focus on sustaining leading market positions in core segments, measured capital spending, a cautious approach to M&A, stable dividend payments, and efforts to maintain leverage under control.’
The rating agency highlighted that Omantel’s liquidity has improved.
‘We forecast that Omantel’s cash balance of RO34mn as of June 2024 and operating cash flow of RO260mn through the end of 2025 will be sufficient to cover capital spending of RO160mn, dividends of RO41mn, and debt repayment of RO52mn over the same period. The liquidity is also supported by very modest debt maturities until 2028 when the outstanding $689mn bond is due, followed by the $500mn sukuk due in 2031,’ the rating agency said.
However, Moody’s pointed out that intense competition in the Omani telecommunications market continues to impact Omantel’s business.
Moody’s said, ‘The entrance of Oman Future Telecommunications Company under the Vodafone brand has broken the duopoly of Omantel and Ooredoo as integrated operators. As a result, the Omani telecom market has become one of the most challenging within the GCC region. This has led to flat connectivity revenue for Omantel and a slight decline in its subscriber base.’
