I blogged about what a loser this company seemed to be way back in 2007 here when the deal was done. I suspect it's no co-incidence that then CEO of Omantel, Mohammed bin Ali Al-Wahaibi, was subsequently replaced by the Government, after he resigned "for personal reasons". The current CEO is a smart young technocrat Dr. Amer bin Awadh Al-Rawas.
Now Omantel are looking for shareholder approval at yet another extraordinary general meeting to effectively loan the apparently useless company a whopping US$70 million: see the story in Reuters. The company was not able to borrow money on its own, never a good sign.
Remember the public company paid a whopping 25PKR per share for the majority stake - strangely enough, to a well connected Omani Businessman, one Sheikh Sulieman Ahmad Said Al-Hoqani, who must be credited with making a very, very cunning sale for close to $200 million - shares of which are now trading at around 2.5PKR per share, about a 95% loss for Omantel shareholders taking exchange rates into account. (Omantel threw more money at the useless company in 2009 too).
As the report read:
Omantel seeking shareholder approval for Worldcall
DUBAI | Wed Nov 10, 2010 3:07am EST
Nov 10 (Reuters) - Oman Telecommunications Co. OTL.OM (Omantel) will seek shareholder approval to serve as a guarantor to obtain funding for struggling Pakistani unit Worldcall (WCTL.KA), the company said on Wednesday.
Worldcall has requested $70 million in funding for capital expenditure and meet liabilities but was unable to independently obtain the required financing, Omantel said in a statement.
Omantel's board of directors will raise the issue of stepping in as a guarantor to obtain the financing at a planned extraordinary general meeting.
Omantel took a 56.8 percent stake in Pakistani diversified telecom operator Worldcall in 2008 as part of its strategy for international expansion. The $193 million deal marks its biggest foreign investment so far.
But the subsidiary came under pressure due to the global financial crisis and price wars that weighed on margins.
In 2009, Omantel sought to inject $50 million into the struggling unit.
Last week, Omantel reported third-quarter profit declined 33 percent, falling short of analysts' estimates, as expenses rose. (Reporting by Shaheen Pasha; Editing by Amran Abocar)
As far as I'm aware, no-one has questioned the board on this strange acquisition or the inflated price paid for it, nor the arrangements of the financing of the cash they've subsequently poured in. And I guess as long as Omantel can continue to exert pseudo-monopoly power over telecoms charges in Oman, the shareholders seem willing to stay for the ride, subsidised by the everyday people and businesses of Oman.
Sheikh Sulieman Ahmad Said Al-Hoqani was also on the Board of Directors for Oman Air, BTW, until he was replaced in 2007.
Photo: Omani businessman Sheikh Sulieman Ahmad Said Al-Hoqani, circa 2004.Interested readers may wish to see for themselves the intricate network of companies associated with Sh. Al Hoqani and his associates via here, but be warned, it's a bit of a rabbit hole.
Omantel does seem to have an awful lot of extraordinary general meetings...
I wonder if anyone has looked into who WorldCall owes all that debt to?
The big question is why would anyone invest in anything in a place like Pakistan, a country whose politics are dubious at best and unstable unless their intentions were not honourable in the first place. I never bought any shares in Omantel and those who bought let it be a lesson to you that investing in Omani companies aint a good idea as we dont know the background of our investments and who is involved.
ReplyDeleteI firmly believe that certain people with vested interests pushed this deal ahead and force Omantel to buy such a sick company so that they can make a truckload of money themselves.
ReplyDeleteI think H.M. needs to monitor the way Government Companies manage their finances as well as merger & acquisitions.
Over the years I have noticed that Oman has some sort of soft corner for Pakistan. Heavy investments in Pakistan, Purchase of Pakistani Jet-trainers etc.
Is H.M. trying to appease a cetain section of the Omani Population who can trace their roots back to Pakistan???
I met the ex CEO of Omantel a few years ago when he had asked me to invest in the company. I had told him that Omantel was way behind the curve for they were not investing on their data network. I explained that our companies and myself required to be connected at all times through the mobile networks and the key was data and not telephony. I further explained that the future revenue stream for Omantel was in Data and not telephony. His response, The Omani people will be slow to adapt to data and it was too early for them to invest into the infrastructure. We know what happened when Nawras came in.
ReplyDeleteThe point is Omantel was a monopolistic company which only succeeded because it controlled the market. Once there was some competition from a professional company Omantel suffered as was expected. When you have a board who is completely inexperienced and a non professional management running the show, you cant expect much more. The same story persists in many of our companies in Oman.
The Pakistan debacle is a symptom of the inept board and management that existed when the deal was made. Have things changed? Are things going to improve from now on? The jury is still out but I wouldn't hold my breath.
They can afford to squander money, since they have a captive public whom they are fleecing for ISD calls and Internet.
ReplyDeleteAnd would the Telecom Regulatory Authority be at all interested in this??? Apparently no telecom laws are being violated in The Sultanate??? Just reading yr account of this makes me want to do business with an Omantel competitor -- where I figure I might get more value for money.
ReplyDeleteThese guys must hate you but the rest of us love the truth. Hope you're enjoying your new place.
ReplyDeletehaving worked in Pakistan and Oman I can wholeheartedly agree that someone, somewhere made a whole lot of money.. but probably not the shareholders of Omantel
ReplyDeleteI am from Pakistan myself, and I am baffled by this decision by Omantel myself.
ReplyDeleteBefore the nay-sayers bring on the "ZOMG politics Taliban yadda yadda!", I can tell you for a fact that between 2001 and now, we've had exceptional growth in the telecom sector, with close to 100 million mobile subscriptions now...We've got Orascom, Telenor, Warid and China Mobile who've invested seriously big money into the industry...(And ofcourse the telecom sector in Pakistan is well ahead of any of the GCC countries with regards to pricing or level of service)
The problem here: WorldCall was never a mobile operator to begin with. They operated PCOs (public call offices) in a fair few places, but their core business was effectively decimated when the mobile operators started their big competition...
Their share price at time of sale was around 29 PKR per unit, and Omantel paid 25...just after that, their downward slide started...and once our stock exchange dipped into it's low trough before recovering, WorldCall didnt recover along with it, simply because it has now been reduced to a little-known operator of cable TV in isolated pockets of Lahore only.
No wonder the Omantel rates are so high, they loot the subscribers and in turn let a few (or one ?)individuals loot them !!!!
ReplyDeleteThey send the ROP after people who use VOIP ( a few thousands R.O. loss )and the people who caused loss in millions continue to florish !!!
How long can the company (and the country) survive ???
Interesting point from the poster above, here is something that i found from a blog in 2007 -
ReplyDeletehttp://omancommunityblog.blogspot.com/2007/11/omantel-smoke-and-mirrors.html
One thing is sure that the investment will not be made without permission from highest level in Government. Afterall government still holds a substantial share of Omantel.
ReplyDeletesooooo
ReplyDeleteThe CEO of OmanTel has left 14th March 2011 - was he pushed, did he fall on his sword