Musca: UK-based infrastructure management firm Helios Towers has pledged to build at least 300 telecom towers around Oman as part of a landmark long-term master services agreement reached with Omantel, the majority state-owned telecom services provider of the Sultanate.

This was announced by Talal Said al Mamari, Chief Executive Officer of Omantel, at a virtual session with investors hosted by Muscat Securities Exchange (MSX).

Speaking during the forum, Al Mamari highlighted how the deal, reached on May 11, 2021, to sell its passive tower infrastructure to Helios Towers will drive cost efficiency and infrastructure development.

In his address to the virtual audience, he said the $575 million sales is in line with Omantel’s strategy to develop world-class asset-light, strategic, and advanced communications networks in Oman and to generate the greatest value and efficiency for the benefit of shareholders, customers, and partners.

The Omantel CEO emphasized that the sale is critical for achieving the Company’s investment and cost efficiency targets, especially with respect to improving its balance sheet position through prepayment of existing borrowings which will further lead to reduced financial charges going forward.

In addition to the schematics of the agreement, Al Mamari said Omantel will sell 2,890 towers in the Sultanate to Helios Towers for a cash consideration of $575 million, an amount which has made the transaction among the highest in valuation in the emerging markets in recent years.

Under a long-term master services agreement, Omantel will continue to utilize the tower assets for a period of 15 years with renewal options, he added.

On its part, Helios Towers has committed to building a minimum of an additional 300 new towers over the next 7 years.

Al Mamari also stressed the fact that Omantel will retain full ownership and control of its active network and spectrum as well as its software, technology, and intellectual property with respect to managing its networks, adding that the deal assumes significance for Omantel as telecom business models globally are evolving towards new sources of competitive advantage and differentiation requiring strategic and transformative moves.

Against a service fee to Helios Towers, Omantel will eliminate certain direct network operating costs and through the build-to-suit arrangement avoid passive infrastructure capital expenditure for new sites.

This strategic partnership has invited Foreign Direct Investment (FDI) in Oman, supporting Oman as a leading FDI destination in the GCC, while creating jobs and opportunities in the country, he said.

Through this agreement, Omantel has fulfilled five main objectives, which Al Mamari listed as reducing leverage and raising capital to fund network up-gradation, accelerating network deployment, improving cost structure, focusing on core business, and following international best practices.

On elaboration, the CEO stated that the capital released through this sale will be redirected towards strengthening the Company’s balance sheet and investment in new technologies and new products and services, which will be seen in the form of higher network capacity, and faster rollout to rural areas to bridge the digital divide.

This strategic partnership with Helios Towers has invited substantial Foreign Direct Investment (FDI) in Oman creating jobs and opportunities while cementing the Sultanate’s reputation as a business-friendly nation.

Underscoring the agreement’s positive impact on KPIs, Al Mamari said that Omantel will receive cash proceeds of the sale against payment of service and lease charges, while Helios Towers will bear the direct operating cost of the passive infrastructure, including electricity, fuel, operations, and maintenance, depreciation, ground rent, and other costs.

This is said to have a positive impact on Omantel’s net profit according to Al Mamari.