Saturday, November 17, 2007

Omantel - Smoke and Mirrors

1. The company held an extraordinary general meeting (EGM) of shareholders on November 12th to amend Article 22 of its Articles of Association. I didn't receive anything in the mail to inform me of this EGM or what exactly Article 22 says and why it had to be amended. Does anyone here know?

2. The company's new chairman is the undersecretary of the Ministry of Heritage. Wasn't there a royal decree about 10 years ago which forbids ministers and undersecretaries of holding such positions in publicly traded companies?

3. Omantel has been playing the press for the past few months about their plan to buy a Pakistani telecom company, WordCall. This week it finally announced that the deal is coming through. They'll pay $204 million for 65% of the company. Every single mention of this in the press, obviously through Omantel press releases, includes a paragraph or two about Pakistan's relatively low mobile phone penetration which makes it an attractive market. Putting the two together you'd naturally assume that WorldCall is a mobile telephone service provider, right? Wrong. According to WorldCall's website, the company has the following:

Wireless Local Loop (WLL) through CDMA 2000 1X technology in over 40 cities, nationwide presence of long distance & international (LDI) network with 44 POPs, over 70,000 payphones, largest broadband HFC networks in Pakistan providing triple play (CATV, broadband internet, telephony), the pioneer prepaid calling card "Hello" and rights to dark fibers in a national long haul network being built across Pakistan.
In other words, WorldCall does provide wireless services, but they are WLL telephone and data services, not mobile phone.

Isn't Omantel deliberately misinforming their shareholders by implying that they are buying a mobile telecom company when they're not? And what about the company's financial performance? A quick glance at the WorldCall's financials shows that the company's 2007 results show flat sales and lower profit. Anywhere else, Omantel would have to explain whey are buying the company, but in Oman no one asks, so they don't have to play spin. And, by the way, WorldCall's majority shareholder is an Omani individual who owns about half of its shares. I wonder if he's offloading his entire stake to Omantel. If so, most of the $204 million will be going into his pocket.


Suburban said...


When I read the press release in the papers, I assumed that World Call must have some sort of proprietary Software or technology for VOIP which Omantel wants to use here...

I have a couple of follow up questions Muscati. Who is the Omani with the 50% stake in WorldCall? Under what circumstances can an EGM of shareholders be called? DO they need to mail each shareholder, or can they just put a thing on the website and place an ad in the paper?

The "Poacher and game keeper Busines model" never ceases to amaze me. I belive the Minister of Oil and Gas is also Chairman of the board for PDO, and Omanoil, among others. Since the Ministry fulfills a duty as a regulator, it strikes me a something of a conflict of interest that the MOG would also be permitted to sit on the board of directors. IMHO, There is a lot of oppertunity for abuse of power in setups like that.

Excellent post.

Twister said...

Pakistan has a very rapidly growing mobile telecommunications market, and so far, 5 operators are liscenced to offer mobile connections:

1. PakTel, a private company
2. Warid from abu Dhabi
3. Telenor from Norway
4. Mobilink, the largest of them. Owned by Orascom.
5. UFone, owned by the state-run PTCL, now managed by Etisalat

There's another company, InstaPhone, but they operate a CDMA/AMPS network.

WorldCall is not exactly a company I would describe as "well-liked" by customers...

Undercover Dragon said...

Excellent post Muscati,

Who is the mysterious shareholder????

Stop This ASAP ! said...

What??? This is unbelievable !!!. I always thought WorldCall is a mobile Operator ! Apparently not. If it is true that majority of the stake of which OmanTel want to buy from WorldCall is held by one "Omani" business man, than thats just inside trading and that is just pure corruption.
The MSM should intervene and an investigation should start ASAP. I only see OmanTel are shooting themselves in the foot !!!

TI3GIB said...

Omantel ? Foul play ?


muscati said...

Sorry for the late reply, I was in Dubai for the past few days without an internet connection.

Suburban- The Omani majority shareholder in WorldCall is a well known investor, but not exactly a household name. His name is listed clearly in their website. I'm not sure how EGM's work, but in the past I have received notices by mail from companies which I had shares in with exact details of why EGM is being convened and which article is being changed with a both before and after version of the proposed article. In fact, I got one from one bank even though I had less than 100 shares in it. In Omantel's case, since we still have a couple hundred shares in my son's name, I was supposing I should have gotten the details.

Anonymous said...

Check this…

Ericsson 'paid money to Oman minister


Suburban said...

Muscati- thanks. It's pretty suprising that they didn't mail you anything. Sorry bud.

Anon- Just read the article. Sad. Totally not suprising. I bet an anual audit of ministers, undersecretaries, and thier families would prove really interesting. I assume this was not widely known here in Oman before today?


Undercover Dragon said...

I've posted some analysis of the OmanTel deal. It looks totally fishy with OmanTel paying waaaaay too much.

Also, the Ex-Minster has been named after Swedish Radio posted more evidence. His name is on my blog - Muscat Confidential - don't want to put it here.

Undercover Dragon

allen said...