* Govt stake in Omantel will drop to 51 pct from 70 pct
* Stake being sold is worth about $570 million
* First phase of sale is private placement for big investors
* Second phase for retail investors to begin by March-end
* Omantel shares fall 2.2 pct to two-month low (Recasts, adds details)
By Matt Smith
DUBAI, March 16 (Reuters) - The first part of the Oman government's sale of a 19 percent stake in telecommunications operator Omantel, part of efforts to revive its privatisation programme, was 1.99 times subscribed, the company said on Sunday.
The sale, which will cut the government's holding in Omantel to 51 percent, is expected to raise about $570 million as the Gulf state seeks to boost its non-oil income and fund rising public spending.
In February, state news agency ONA reported that Oman would sell 142.5 million Omantel shares in two equal-sized parts, with the first - a private placement - aimed at wealthy individual investors and institutions; it required minimum orders of 2 million shares each.
That phase was completed last Wednesday. Bids ranged from 1.500 to 1.900 rials per share, while the cut-off price at which the placement was fully subscribed was 1.511 rials per share.
Omantel's shares fell 2.2 percent to 1.555 rials on Muscat's bourse following the announcement, reaching their lowest close since mid-January.
Subscribers are expected to receive the shares sold in the first phase by the end of Monday, the statement said. The second part of the sale, which will be open to Omani retail investors, is due to begin by the end of March.
The government owns more than 60 companies across the economy, and Minister for Financial Affairs Darwish al-Balushi has said some will be privatised. Local media quoted officials last week as saying the government planned to divest its stakes in 11 firms, but a timetable and other details were not given. ($1 = 0.3850 Omani Rials) (Editing by Andrew Torchia)