The telecom sector is still in its infancy despite allowing foreign players into the market in 2004 in accordance with the directives of the World Trade Organization (WTO). In the last two years, the sector has shown signs of rapid progress as many prestigious projects are schedule to come up in the next few years.
After the government allowed private companies, the market began to change.
Both fixed-line and mobile telecom penetration levels are said to be relatively low. Since the launch of the second mobile operator Nawras Telecom, mobile subscriber growth has increased rapidly. Strong growth rates have also been recorded in the broadband market as the major provider Oman Telecommunication Company (Omantel) prepares for further competition in the years ahead.

Recent developments indicate that Omantel is finally getting its act together and preparing to take on more foreign players, though the telecom market is somewhat restricted. Omantel signed two Memorandums of Understanding (MoUs) with Flag Telecom, the first of which will make the Sultanate an Internet transit point between the Middle East and Africa while the second will link the Sultanate between the Middle East and Africa for a marine cable extension project undertaken by Flag Telecom.
The MoU, signed by Omantel Executive President Dr Mohammad Bin Ali Al Wohaibi, and the Executive President of Flag Telecom, Punit Garg, was attended by private Indian telecom players like Anil Ambani, Chairman of Reliance Group. The first project will be operational next September and will provide Internet services to 12 countries including those in the GCC.

Dr Al Wohaibi said the signing of the MoUs was part of Omantel's keenness to boost its investments in telecom infrastructure and to make the Sultanate a central hub for international telecommunications activities. It will also help in linking the Sultanate through the Internet with several international financial centres in Europe, America, Asia and the Middle East, he informed.

The project will enable Omantel to secure high bandwidth based on 15-year contracts. Several submarine cables from various international quarters will converge at the main terminal in Seeb. Efforts are also underway to commission other stations in Iran, Yemen, Sudan, Egypt and the Maldives. Oman is currentluy linked with India, Qatar, Bahrain and Kuwait, all of which have commissioned the system.
It must be noted that after the successful partial privatization of Omantel, and the successful entrance of The Arab Advisors Group projects, Oman's total cellular revenue is to reach around US $582 million in 2009, growing at a rate of 6.5 per cent over the 2005-2009 period.

In 2005, Nawras Telecom had a market share of about 14.8 per cent as the whole market grew by a healthy 22.8 per cent, jumping over the one-million benchmark. Further liberalization of the market will see better results in the next two years.
Currently, fixed line penetration in Oman is significantly lower than in other GCC countries. Oman's Public Switched Telephone Network (PSTN) penetration stood at 9.5 per cent by end of 2004. In an attempt to improve fixed line penetration, Omantel launched free incoming calls, prepaid fixed line services and began using wireless fixed local loop in rural areas. These attempts, together with the expected competition next year in fixed line services, could lead to a surge in fixed line subscriber base.

The Arab Advisors Group projects PSTN subscribers to grow at a Compound Annual Growth Rate (CAGR) of 8.8 per cent between 2005 and 2009, reaching 365,000 subscribers by end of 2009. Such a scenario bodes well for further liberalization of the fixed services market. The eighth Arab Telecom and Internet Forum (ATIF) 2006 predicted that the Middle East and North Africa (MENA) segment, which also includes Oman, will be the next big internet and telecom market. The forum discussed pertinent issues, including the state of the telecom industry in the Arab world, the role of the Informationa and Computer Technology (ICT) regulatory authorities and internet cities in developing the sector in the Arab world, the challenges facing Telecom CEOs in the new phase of market development, the ITU's world telecom development conference outcome and the regional initiatives, broadband, wireless technologies, mobility and the next generation satellite communications technology.

Transport and Telecommunications Minister Shaikh Mohammed Bin Abdullah al Harthy stated that "the huge competition in the telecommunications sector in the Arab world reflects the extent of openness and economic liberalisation and the existence of an environment conducive to the development of this essential sector."
He noted that Oman had gone a long way in liberalising the sector and opening it to competition. "There are other steps to allow a new operator of fixed line and the Internet in the near future. This is part of the Sultanate's strategy to fully liberalise the sector," he asserted.

Shaikh Mohammed Said that the new developments had resulted in "radical changes" in the country's telecom market, notably the moving from being a service oriented to a commercially motivated sector. He lauded the competition between Oman Mobile and Nawras which were both managing their rivalry efficiently. The competition has been a boon to subscribers.

The minister underlined that the telecommunications and Internet sector was undergoing fast and qualitative transformation. Calling the Arab world to keep pace and benefit from global developments, he remarked that "our objective is to narrow the gap in digital knowledge between the East and West which is affecting several other fields. In this regard, the private sector had a significant role to play."
According to official statistics, Omantel's net profit for the first quarter of 2006 rose by 9.6 per cent to RO21.41 million (US $55.62 million). One of its senior officials said, "We have achieved a better growth in mobile and broadband telecommunication services during the first quarter. We expect a better growth in net earnings for the entire year."

During the period, the company's total revenue soared by 22.6 per cent to RO77.97 million from RO63.58 million, while total expenditure grew by 25.8 per cent to RO53.21 million. Omantel bagged a RO12 million contract from Petroleum Development Oman (PDO) to build a transmission network and fiberoptic cable links. Winning such lucrative contracts show the company has a big hold on the market.
For over 30 years, Omantel has been contributing to national development in many ways. Currrently, its telecommunication network is comparable to the standard of any developed nation. And as Wohaibi puts it, "We, in Omantel, are now focusing to leverage our competence and infrastructure capability to assist the country to transform into the digital world order."

Currently, more than 95 per cent of the population has access to some form of telecommunication facility. In addition to normal basic telephone services, Omantel also provides special services and packages for corporate customers. The company provides services such as national and international leased lines, hi-speed Broadband Internet (PowerNet), corporate Broadband ATM network (MaxNet), ISDN, VSAT and Internet Dial-up Access, and has planned many more services for the near future.