UPDATE 2-Oman Nawras Q3 profit slides, costs rise, text income down

Sun Oct 21, 2012 11:45am EDT

* Q3 profit 7.2 mln rials vs 13.48 mln rials a yr ago

* Q3 revenue 46.9 mln rials vs 49.2 mln rials a yr ago

* New frequency to double 3G network speed, capacity

* Data revenue up but not enough to make up for slump in text revenue (Adds CEO, CFO quotes)

By Matt Smith

DUBAI, Oct 21 - Oman's No.2 telecom operator, Nawras , reported a 47 percent fall in third-quarter profit on Sunday, blaming the slump on falling text revenue and higher network maintenance costs.

The firm, majority-owned by Qatar Telecom (Qtel), made a net profit of 7.2 million rials ($18.70 million) in the three months to Sept. 30, down from 13.48 million rials in the year-earlier period, according to a statement to the Oman bourse.

"The main reason for the earnings drop is the decline in text revenue," Jorgen Latte, chief financial officer, told Reuters in a telephone interview. "SMS traffic has fallen by almost half over the past year, while prices have not changed much. Voice revenue is more or less flat."

Nawras, which ended Oman Telecommunication Co's (Omantel) monopoly in 2005, also reported declining profits in the previous two quarters.

Data revenue rose 8 percent in the third quarter compared to the previous three months.

"The growth in data revenue still hasn't made up for the fall in revenue from SMS (text), but this is starting to come good," said chief executive Ross Cormack. "We're trying to open up the taps for data over the next few quarters."

Nawras switched network maintenance to Huawei from Ericcson during the third quarter, which temporarily hiked costs, said Latte, as Ericsson stopped price discounts ahead of the contract-end.

The operator will add extra frequency this year that will more than double the capacity and speed of 3G services in the Greater Muscat area, Cormack said, adding these network improvements would be rolled out nationwide over the next 2-3 years.

"We are in a transitional period from the old way of doing business in telecoms to the new one, which is based on data," said Latte. "In order to cope with demand going forward, we need to revamp the whole network."

Third-quarter revenue was 46.9 million rials. This compares with 49.2 million rials a year ago.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the nine months to Sept. 30 fell 10 percent to 69 million rials.

The operator had 2.13 million mobile and fixed customers at September-end, up 9.3 percent from a year ago.

($1 = 0.3850 Omani rials) (Reporting by Matt Smith; editing by Ron Askew)

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