Nawras going through growing pains in Oman

What's down: Nawras, the Omani telecoms company, fails to connect with investors as its growth plans slow down.

The Omani telecommunications operator Nawras is struggling to send the right signals to investors as it tries to grab business from Omantel, its state-owned rival.

Nawras announced second-quarter net profit of 10 million rials on Wednesday, a decrease of 13 per cent on the same period last year.

Revenue grew 7 per cent to 48.8m rials as the company expanded its fixed-line broadband business and added services for companies including Oman Airports Management and Nestle.

Nawras shares fell 3.18 per cent to 0.669 rials on the Muscat Securities Market yesterday. The stock is down 15.8 per cent so far this year. Nawras' decline dragged the Omani index to a two-year low.

The company faces a protracted period of high costs as it prepares for growth, said Karim Khadr, a telecoms analyst at AlembicHC.

"They're going through positioning themselves as a total telecoms operator - a company that offers everything," he said. "The question is: are we going to see a substitution from fixed broadband to mobile broadband?"

The expense of hiring about 200 staff and greater operational costs as the company expands were the most likely factors behind a hit to Nawras' margins.

The sultanate's increased focus on Omanisation after political unrest this year was also leading to increased costs, said one analyst, who asked not to be named.

The analyst said it would be some time before the company's efforts paid off.

Nawras, which broke the monopoly of Omantel, listed on the Muscat exchange last November.

However, regulatory changes led to a shrinkage of Nawras' base of prepaid mobiles by 37,000 from the start of the year.

Last year, Oman's telecoms authority announced rules that led to the termination of SIM cards for expatriates leaving the country after the expiration of their visas, and for mobile numbers inactive for six months, instead of the previous 12.