Sunday, December 20, 2009

Omantel arrest people for VOIP. Worldcall proven to be an even worse investment than predicted.

I've been meaning to blog this for a while. VOIP is a big issue in Oman.

Omantel continue to pressure the Telecomms Regulatory Authority and the ROP to arrest people providing VOIP (voice over internet protocol, ie skype) services.

If you own or run an internet cafe, it is illegal in Oman to sell 'internet phone cards' or to enable people to use Skype or any other VOIP.

Oman cuffs 212 for selling VoIP calls
This year, police in the Arab nation of Oman have raided 121 internet cafes throughout the country and arrested 212 people for providing VoIP services, according to a local report.

"Around 212 accused of various Asian nationalities have been arrested since the beginning of the year [until October 26]," a senior police officer told Middle East and North Africa news outfit Menafn.

Providing telecom services without a license is illegal in Oman, and that includes VoIP. Those who violate the law stand to be fined 50,000 Omani Rial (about 130,317 US dollars) or spend two years in jail or both. The senior police officer, who requested anonymity, told Menfn that both cyber cafes and individuals had been using VoIP to provide cheap international phone service, saying this resulted in huge losses for local telecoms.

"Most arrests were made after the Directorate General of Inquirires and Criminal Investigation was tipped off about people using the internet and some technical device to sell the cheap calling cards," he said.

Omantel maintains a total monopoly on Oman's international telecommunications. NAWRAS are a retail competitor, but even they are forced under their licence agreement to get their internet and overseas access only via Omantel. Omantel have also for years been blocking access to the official skype website* and interfering with skype packets.

As a result of this monopoly power, Omantel have been milking the population of Oman for years with expensive international call rates. And now they are continuing to protect their super-tax by using the law to bust people using VOIP. These are people who are among the poorest in the country. Rich people like me (and you, if you're sensible) run Skype at home on our own computers. (Actually, I don't know if home use of skype is legal either, hmmm...)

Meanwhile, Omantel management are free to waste hundreds of millions of dollars on useless overseas acquisitions like WorldCall Pakistan. Their cash purchase of a majority stake in WorldCall Pakistan from an Omani businessman [Sheikh Sulieman Ahmed Said Al-Hoqani] in late 2007 has been a total disaster. They paid US$190 million at 25 Pakistani Rupee per share for 65% of the company, a suspiciously large premium even at the the time. Their investment has since plummeted in value (see graph).

Chart: Omantel have blown $170mln our money on a useless Pakistani company WTL.KA

The shares were trading at around 3.5 PKR per share today, about US$0.04 cents, compared to Omantel's purchase price of 25PKR, equiv then to around $0.42 cents. So they've lost around 90% of their investment - around US$170 million - plus need to inject even more cash. That is comparable to around 6 months of profits.

Last month, Arabian Business reported that Omantel need to inject another $50 mln into Worldcall, following ever building losses ever since they took over.

... Omantel, Oman's largest company by market value, is also waiting for shareholders to approve a $50 million injection into its Pakistani unit Worldcall, Mamari said. The group is still deciding whether to use equity or raise debt to finance the injection.

Omantel bought 488.8 million shares of Pakistan's Worldcall Telecom Ltd, equivalent to 65 percent of the company, in February 2008. The $193 million deal marks its biggest foreign investment so far. But Worldcall's shares have fallen sharply since.

So I guess Omantel will need to keep the ROP arresting people to stop VOIP while it continues to bleed the population for massively expensive overseas phone calls. Omanhel are also making 134 people 'voluntary redundant' to reduce costs too.

Meanwhile the money is being used to subsidise Omantel's failed business adventures overseas.

Thanks Omantel!

And thanks TRA and the Government too. Remember, Omantel is a majority Omani Government owned company. The Government clearly doesn't mind that Omantel is taxing the most vulnerable people in the country with massively inflated charges to subsidise their failed (and suspiciously expensive) overseas investments.

So thats alright then.

* A question for the lawyers: how is Omantel's blocking of Skype allowed under either WTO or US FTA rules?


  1. Good post, like the spin and return back to Worldcall.

    I guess, the real question here is: Seeing as this is a Government company (essentially), when is State Audit going to come in and do it's job?

    It'd also be interesting to know if blocking VOIP /stifling a free market is allowed under the WTO FTA?

  2. Great post, Dragon. The VOIP ban is definitely one of the most obnoxious regulations I've encountered in Oman. I'm not a lawyer, but I did a little research on the WTO question -- just because the VOIP ban irritates me SO MUCH. Tim Wu over at Columbia Law School says that the relevant law for the question of VOIP/Skype bans is the WTO General Agreement on Trade in Services (GATS) (See Wu's paper: Signatories to the agreement are bound by the following: “Appropriate measures shall be maintained for the purpose of preventing suppliers who, alone or together, are a major supplier from engaging in or continuing anti-competitive practices.” I would say that banning all VOIP technology is a pretty flipping anti-competitive move, Omantel.
    Wu goes on to conclude that VOIP bans in China, Mexico, Qatar and Venezuela are probably illegal under WTO agreements. I would assume that this finding would also apply to Oman.

    Is there any hope for bringing down the ban?

  3. PC to PC VOIP calls may get away as they do not use PSTN or land in a telephone. But PC to Phone VOIP is what Omantel is targetting.What Omantel is not realizing is that these disadvantaged people who use the cheap Voip phone would never use Omantel to call home as they just can't afford it with 70 OMR salary. My heart really goes out for these unfortunate victims of Omantel action.
    Omantel needs to know that those who use VOIP also consume data and thereby Omantel gets revenue.

    On the top of it Muscat Daily reports that individual users who have stocked up the cards are being monitored and could be fined at airports while leaving the country.

    The TRA only mentions providing service is illegal.There is no mention of individual users but Omantel VP COmmercial made a bold statement about tracking individuals.
    It is time for calling the bluff of such people.
    It is not just expats but even Omanis also are losing out on connectivity.

  4. Yeah, hel! Otherwise, my parents wouldn't have to pay a monthly bill of 2000 rials of unexpected phone calls to India and some Asian islands I haven't heard of after that day in 2006. I could be given that 2000 rials and allowed to go to Australia with my friends next summer but alas!!

  5. I really can’t understand what TRA job is.. Actually It should “they” who should ensure that new technologies get in the system. Yes Oman is a small markets compared to America, Europe, India or Pakistan. But even there I find Regulatory authorities are mostly on the consumer side.
    And what about if somebody wants to open BOP, Call center in Oman. Moreover Look at the charges of ADSL, since it is Launched not a single paisa is reduced.
    I think TRA should stand up and made clear policy to bring in VOIP in the country because it will come any way. More the scrutiny is being done, more lucrative the business gets.

  6. When they say "this resulted in huge losses for local telecoms", I wonder what their figures are? Maybe a Million Rial loss compared to their 50 mil gains??

  7. What i find funny is that next to your post there's a Google Ad saying:
    VOIP Phone? Try Vbuzzer
    Fits Vbuzzer Software in Oman Cheap Calls to Any Phones Worldwide

  8. Great post and very well written, UD.
    Actually worldcall is not first venture Omantel made a big loss. Previously there was no system of deposit money for post paid GSM. A lot of people accumulated huge amounts and didn't pay Omantel. Thanks to billing being done by OIFC they put the blame on OIFC and got away with the huge loss. Another funny thing is all utilities in Oman has to necessarily get the billing done by OIFC, howsoever inefficient they are. I get a monthly bill from OIFC by post for the last 5 years in the name of a guy who was in my place for outstanding balance of 100 Baisas. Each bill is sent on a 50 baisa stamp and this is continuing for a long time
    The fact is if Omantel allows VOIP their revenues will crash so much so that they will not be able to even pay salaries to their highly overpaid staff.
    Who else benefits from this monopoly.

  9. I have skype but prefer google talk and video call. This will never stop in Oman ans those who are poorly paid will find a way round it. Is it really worth the effort of the ROP, are the communication companies really losing that much? Is this really about not being able to monitor and check calls?!?!?!

  10. This whole monitoring of phone calls etc is pie in the sky.
    The only people who get their calls earwigged on are those who are on a target list of suspects and trust me - if I need to listen in on you there are far sneakier ways then just using your landline.
    If I told you how the 9/11 boys did all their comms you would be stunned - not a phone used in the entire operation.

    This has nothing to do with the above.
    This has to do with greed, and as far as I have read in other journals, it is a personal crusade by one man to pour his beliefs and restrictions onto the nation by banning freedom of choice and freedom of expression.

    Sooner or later this is all going to come out in the wash. And there will be nowhere to run.


  11. A really great post - I had no idea this was such a huge problem! Sounds like some very poor decisions made by Omantel and they are now trying to deflect the blame elsewhere. I can only sympathize with the poor underpaid laborers who are only trying to keep in touch with their loved ones in a way that they can afford.

  12. Yes, VOIP is clearly a topic of interest! Thanks for the comments so far.

    Thx. We wouldn't want shareholders to forget WorldCall, would we? As for State Audit, perhaps you or another concerned citizen or shareholder should drop them a complaint?

    FL - Thanks for the research. So Skype would have to sue? Or ask their Government to raise it at the WTO?
    Robin - Yeah, cos MSN or google chat is just totally different - good point. What planet are they on? "No, we must protect the mail monopoly: everybody! From now on, no emails!!" Really.

    NCP - Can they give me 2000 rials too? And good choice of party country with 2000 rials, BTW.

    TOD - Hmmm. I guess the TRA are trying, what with Nawras and the new tertiary licences. But they are also still aware that Omantel is owned by the Government, and can only do what they've been legally instructed to do...

    ROI - Probably. Although given Ms Dragon's phone bills before Skype, maybe more than a million...

    OCI - LOL. They're all VOIP ads now!!! Intelligent ads from Google. Note: these ads may be illegal in Oman kids.

    JC - Thx! Who owns OIFC? They are useless. At least at bill collecting!

    DA - Yeah. A view often raised. But apparently solved (if the security services care, they know DA. Don't kid yourself). If our swecurity was dependent on tapping Skype, we're all in much bigger trouble.

    JD - Thanks for dropping by. Who is this person?

    SoA - Common knowledge. I was surprised the story was even reported! One of those cases where no-one oin a position of control actually realises how it looks from outside. The Times of Oman, in breaking the story based on an official press release, think its a good example of the cops enforcing the law and a good moral tale. LMAOFOFL


  13. Assumptions of a User
    What is not available through omantel is legal and what is blocked is illegal
    So far gtalk- voice and text chat may be legal
    Skype-sometimes legal when available and illegal and when blocked
    Free and Paid VPn client programs- Legality doubtful but if Omantel does not block the client software from establishing a VPN it may still be legal

    VOIP cards- illegal to distribute but may be used discretely at home??

    It is better Omantel specify clearly about all this rather than adding spin to an already confused users

  14. In previous post the second sentence should read as:

    "What is available through omantel is legal and what is blocked is illegal"

  15. Well, if The Times has broken and covered the story it will be the fault of Israel!

  16. Great Post, UD!

    Seriously, thanks for posting this, and I hope TRA ATTEMPTS to resolve this issue ASAP.. Because honestly, it drives me nuts!

  17. can anyone tell me how i can unblock skype in oman?

  18. a proxy server. I use surfbouncer. Just google proxy server, there are many good ones.

  19. oh man. ridiculous Oman. Love the place for SOOO many reasons, but this is NOT one of them.

  20. UD: How come South Korea is walking away with $75 Billion, nuclear power plant contract from UAE?
    Is South Korea a name to reckon with in this business?
    Hope you will put more light on this? May be Oman can opt for one plant instead of coal?

  21. JC
    Oman should be really brave and build a big solar plant. Its low tech enough that within a few years we could be regional leaders in designing and building them for others. The SWF could chip in buy buying interests in several solar startups in USA and Spain.

    Also most of the construction costs would be internal, stimulating employment and real internal GDP growth.

    Nuclear is a con. Everything would be and always would be imported, with no real spin off employment and huge issues around waste, security and management. Why sell gas to buy nuclear when you could just burn the gas? It would be a monstrous monopoly Government heavy boondoggle.

    Solar would allow multiple medium companies, give opportunity to loads of business people, requires little regulation and could generate umpteen local technology experts.

    Its a no brainer.


  22. But why is Abu Dhabi having enough gas and oil going nuclear? Just because they have lots of dollar?

  23. Yes, partially just because they (ie Abu Dhabi) can afford it. It's a boys toys effect.

    It might also be subsidised too.

    But we should go solar. We will never be dependent on imported technology, products, expertise, or pesky things like Uranium or coal.

    As well we could encourage the UAE to buy nuclear, sell us their spare power at the margin (especially at night), and maybe charge them shed loads of cash to bury their nuclear waste in the middle of the Omani desert near Saudi!

  24. Just I want to know that gtalk is legal or illegal in oman.

  25. So now, onward what is Omantel going for?

  26. We have to try and shrink the world, borders...etc. Get people to communicate and bring them closer. That is what the world is moving to. And if there is a cheaper way to do that why not take advantage of it. VOIPs are good for the consumer and eventually going to be tomorrow's way of communication because of the cost benefit. (wheather Omantel like it or not). I would rather say embrace the change before one is forced to accept it. If it is with this logic one would run something, then lets close down the MNCs because they reduce the profit margins of Omani held companies.

  27. read all the posts..This is Really a big problem.. As mentioned its only the underpaid people who suffers from this. And more over as the technology cost is reducing day by day, here cant find any difference.. But it should be noted that they have reduced the call cost to a great extent when compared to earlier cost. This blog and the issues and points discussed should be really brought into the notice of....? whom? no idea... who could make a change in these rules..? who could take the country to the next stage of communication and technology..? Some one really needs to.. something hav to be done at WTO rounds..

  28. Omantel should immediately banned the advertisement of V buzzer telling cheapest rates to call from oman. People may think that it is legal to use v buzzer if showed by omantel....

  29. does anybody know that omantel is targetting individual also who are using voip from their home pc?

  30. i dont think so..if they do so many of them will not able to elave from airport. as its claims they will catch you at airport.
    do you think somebody will sit at airport to monitor who did Voip calls ?? i remember many were afraid to travell and after they told nothing happened at airport.. ;-)

  31. hi, i need to know if skype is allowed in muscat-these omantel calling cards are killing-any cheaper option

  32. Dear Dragon :

    Please check out the following link:

    This could be serious for those who use VPNs purely to access Skype and other VOIP, to avoid paying Omantel's exorbitant rates for overseas phonecalls to our families.It will also block students, researchers and academics from occessing university VPNs (see link above).

    Since the Government has stated recently that it does not intend to block Blackberry - which is, itself, a VPN - the argument that private access to other VPNs must be prohibited for 'security' reasons is highly implausible.

    Banning Blackberry just might be bad for the business climate in Oman, the TRA must realise.
    But banning VPNs and VOIP altogether smacks of anti-free-market monopoly protection, as well as denial of freedom of expression/ information.

    Of course, Nawras's new VOIP service (and similar services which Omantel may soon offer) is very significantly more expensive than Skype-to-phone, for instance, to most Western countries - and the voice quality of the call will still be poorer than a 'normal' call.

    We hope you will investigate this coming iniquity!

  33. how to activate any voip eg:skype in iphone from Oman?

  34. Skype has now been bought over by Microsoft. Will the government still be considering blocking it?? Microsoft has huge installed base in government through their EA (Enterprise Agreements).


  35. wow what a scheme as all of you know that omantel,friendi,renna,nawras i mean all of them interdused a weekly plan of 100mb what is 100mb for it is surely for voip and all nthis compainies know that voip is being used and on 1 hand they catch people with voip second they provide services for voip usage.W.T.H
    while voip is being used just see the internet plans where hav they reached pls dont play with the consumer.

  36. these omani networks r worst network iin the world expensive call expensive internet services and blocking the sites

  37. Please have some more research and check how much investment has been done in Pakistan by Etisalat, AbuDhabi Group, Telenor, China Mobile, Orascom, PTCL, You will come to know Omantel Just did a Little, so is the reason those companies have Acquired the big share in market and taken over the previous Position of Worldcall in Pakistan. Infact name and repute of Worldcall is still alive in Pakistan. The time when Omantel acquired WTL there was a room to sustain, but then technology changed and newer and Bigger investments came across which outdated Worldcall a littlebit. The problem is not bad decision by Omantel, but a too little investment in Pakistan as compared to other players. It needed at least some investment near to its peers in order to Face changing scenario of Pakistan Telecom industry. Reason for survival of Omantel in Oman is infact the Govt. Back and the little population that restricts Foreign players to join and Compete. Still, worldcall in Pakistan has Potential to attract reasonable market share because of relatively bad repute of local Giant, and increasing internet users in pakistan after advent of 3G and 4G. Worldcall is now in a position to become second Option to Broadband because of cheaper rates than 3G,4G internet.


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