Oman said to plan two phases in 19 percent Omantel selloff

The government currently owns 70 percent of the company, and announced plans to reduce its holding to 51 percent

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Oman will sell 19 percent of its former telecommunications monopoly Omantel in two phases, with the first reserved for wealthy local investors and due to finish in March and the second open to all Omanis, Omani media reported.

The government, which now owns 70 percent of Omantel, in September announced plans to reduce its holding to 51 percent through a public share sale, a month later appointing Bank Muscat as adviser.

Since then, there has been no further official announcement, but some Muscat newspapers this week quoted Saud bin Nasser al Shukaily, Secretary-General for Taxation at the Ministry of Finance, as saying a first phase of the sale would consist of a private placement for investors buying more than 2 million rials ($5.2 million) worth of shares.

This will be open to major local individual investors and to institutional investors, and is expected to be completed in March, Shukaily said. A book-building process will determine the price.

The second phase would be open to all Omanis. The government would sell 142.5 million Omantel shares in total; Shukaily did not say whether a certain proportion of these shares would be reserved for the second phase.

Foreign investors will not be able to participate in either phase, but can buy shares on the secondary market.

"The government believes that the current phase of the Omantel privatization should be completed over the next eight to 10 weeks," Shukaily was quoted as saying.

Omantel did not respond to requests for comment. Its market capitalization is $3.05 billion, according to Reuters data, making a 19 percent stake worth about $579 million.

Shukaily said the purpose of the share sale was to expand Omantel's shareholder base and boost market trading as part of a wider privatization drive.

"Increasing the free float will be positive for foreign investors at least in the longer term because it will improve liquidity in the stock," said Shrouk Diab, NBK Capital's assistant vice president.

Opting for a public sale is a change in strategy for the government. In 2007, it said it would offload 25 percent of Omantel to a strategic investor, prequalifying eight operators from Europe, Asia and the Middle East for the sale. It postponed the sale in December 2008, citing the global financial crisis.

Unlike other former monopoly Gulf operators, Omantel has done little to expand abroad. Its only active foreign unit is Pakistan's Worldcall, in which Omantel owns a majority stake.

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