1. technology and computing

Annual Report 2012
His Majesty Sultan Qaboos bin Said
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Vision, Mission, Values
The Nawras Story
Financial Highlights of 2012
Operational Highlights of 2012
Board of Directors’ Report
Board of Directors
Management Review
Executive Management
Nawras in the Community
Financial Review
Corporate Governance Report
Auditor’s Report (Corporate Governance)
Auditor’s Report (Financial Statements)
Audited Financial Statements and Notes
Our Vision
To enrich the lives
of people in Oman
through better
communication
Our Mission
To be the communications
provider and employer of
choice in Oman
Our Values
To be caring, excellent
and pleasingly different
Annual Report 2012 |
3
The
Nawras
Story
4
April
Successful testing
of Nawras’
3G+ network
July
Nawras Sales Training Academy
inaugurated.
August
Launch of mobile number
portability, enabling new
customers to keep their existing
number when transferring
to Nawras.
December
Customer numbers reach
500,000.
January
Nawras signs up its millionth
customer.
February
Agreement signed with UK-based
AeroMobile enabling Nawras
customers to make in-flight calls
and check email.
April
International rates cut for customers
calling Pakistan, India, Sri Lanka,
Bangladesh, and The Philippines.
June
Nawras wins its first global award
Above And Beyond the Call of Duty
at the World Business Support
Systems Awards in Amsterdam.
Nawras launches BlackBerry services.
July
Nawras launches Oman’s then fastest
mobile broadband internet service.
August
Launch of Nawras Rewards, Oman’s
first telecoms loyalty programme.
04 07
05
09
December
Company incorporation,
Nawras began site acquisition
and staff recruitment.
Nawras has quickly
become one of Oman’s
most respected and
innovative companies,
winning prestigious
awards and achieving
a number of notable
firsts since its
formation in 2004.
06 08
February
Nawras awarded Oman’s second
mobile licence by Royal Decree.
March
Nawras network launched with
more than 60 per cent of Oman’s
population covered.
Nawras secures $220 million
start-up funding from a
consortium of banks.
April
Mobile coverage provided
throughout Oman, from the
northernmost region of
Musandum to Dhofar in the
far south.
November
Launch of Nawras Business
Solutions.
December
Over 100 international roaming
partners signed, covering more
than 95 per cent of Omani
travel destinations.
| Nawras – Omani Qatari Telecommunications Company SAOG
May
Nawras cuts internet and data
prices by as much as 80 per cent.
September
Nawras named Middle East
Mobile Operator of the Year
in the CommsMEA Awards.
October
Launch of WebSMS, enabling
customers to send SMS messages
directly from computers.
November
Launch of third generation 3G+
services, a first from Nawras.
Nawras wins Middle East
Business Achievement Award for
Corporate Social Responsibility
at the Leader Conference.
December
Nawras and Oman Arab Bank
launch mobile banking services.
December
Nawras ranked
Oman’s most popular
telecom brand
(Best Brands survey)
June
Nawras named Middle East Call
Centre of the Year at the INSIGHTS
Awards in Dubai.
Nawras awarded Oman’s second
fixed-line licence by Royal Decree.
August
Introduction of self-service
machines for quick and easy
bill payment and recharge.
November
Nawras awarded Superbrand status
by Oman’s Superbrands Council.
December
CommsMEA honours Nawras with
the Customer Service Provider of the
Year, Middle East and Africa award.
Nawras named Oman’s Best Telecom
Service Provider for the third
successive year.
10
February
Agreement signed to land one
of the world’s most advanced
and largest submarine cable
networks in Oman.
May
Nawras receives the Leader in
Telecommunications award at
the Arab Investment Summit
in Abu Dhabi.
Launch of fixed services for
business customers, marking the
start of a new era in broadband
accessibility in Oman.
June
Launch of Nawras fixed services
for residential customers, offering
home broadband and voice
services.
August
Two million mobile customers.
October
Nawras’ Initial Public Offering
(IPO) fully subscribed.
November
Nawras shares traded on the
Muscat Securities Market for
the first time.
December
Nawras named Best Customer
Service Provider of the Year at
the CommsMEA Awards in Dubai.
Nawras recognised for
Omanisation achievements at the
26th GCC ceremony in Kuwait.
Nawras named Superbrand
of the Year, Oman.
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January
Elite Points Program launched,
bringing benefits for all customers
enrolled in the programme.
March
Nawras receives Strategic
Leadership Award at 2011 Global
HR Excellence Awards.
Nawras listing named Best IPO
in the Middle East 2010 by EMEA
Finance magazine.
ISO IEC 27001:2005 certification
achieved for Nawras information
security management system.
April
Nawras lands its first sea cable
as part of the Tata Global
Network-Gulf cable project.
May
Nawras CEO Ross Cormack
named 2011 Outstanding
Leader at TMT Finance Middle
East Awards.
June
Alam Al-Iktisaad Wal A’mal
designates Nawras Best
Performing Company – Large Cap.
New Nawras store opens in
Salalah Lulu location.
July
Nawras wins
Innovation in HR
Strategy at Asia’s
Best Employer
Brand Awards
October
Nawras trials fibre-to-the-home
(FTTH) broadband with speeds
of up to 100Mbps.
Nawras wins Diamond Award
Website of the Year at Oman
Web Awards.
November
Nawras wins Corporate Finance
Award at the ACT ME Deals
of the Year.
Nawras goes live with Tata Global
Network-Gulf cable.
December
Nawras wins Operational
Expansion of the Year at the
CommsMEA Awards in Dubai.
Nawras achieves 87 per cent
broadband coverage of Omani
households.
New store opens in Al Khoud,
taking the Nawras store
portfolio to 27.
January
Nawras voted Oman’s most popular
telecom choice.
February
Launched first mobile international
credit transfer service in Oman.
March
Nawras first to demonstrate 4G
LTE mobile broadband in Oman.
April
Nawras selects Huawei for network
modernisation and managed services.
May
‘Maktabi’ office bundle launched to
enhance communications for small
and expanding enterprises.
June
Nawras starts Network Turbocharging
to enhance customer experience.
July
Nawras family united by move
to Nawras Campus.
August
Caring Nawras Goodwill Journey
8 completed.
September
Sheikh Saud bin Nasser bin Faleh
Al-Thani appointed Vice Chairman.
Launch of Fixed Number Portability
for corporate customers.
Achieved ISO 27001 for entire
IT department.
October
Nawras wins Best Customer Strategy
at Telecoms World Middle East.
November
Signs exclusive marketing agreement
with WhatsApp, the world’s leading
cross-platform messaging service.
Announces sponsorship of
Kickworldwide programme to
develop football career opportunities
for young Omanis.
December
Wins ‘Customer Service Provider of
the Year’ at CommsMEA Awards 2012.
Unveils new concept flagship store
in Muscat Grand Mall.
Annual Report 2012 |
5
Financial Highlights of 2012
Total Equity OMR
168 million
180 million
143 million
92 million
49 million
OMR
194m
2008
2009
Revenue
A reduction in SMS, and on net voice
revenue, resulted in the small decline
in full-year revenue.
2010
2011
ä
2012
3.2%
Total Assets
Total assets increased by 3.2 per cent
to OMR 309 million, from OMR 299
million in 2011.
ä
7.5%
Total Equity
Total equity increased by OMR 12 million
to OMR 180 million.
6
| Nawras – Omani Qatari Telecommunications Company SAOG
OMR 309m
Total Assets
The rise in total assets was attributable mainly
to growth in property, plant and equipment.
Total Assets OMR
174 million
2008
291 million
299 million 309 million
2010
2011
208 million
2009
Net Profit OMR
50 million
2012
48 million
42 million
37 million
Encouraging growth across all customer
segments, record revenue in the last
quarter, and growth in mobile and fixed
data revenue offset the small decline
in full year revenue which was caused
by a reduction in SMS and on net
voice revenue.
Total customers grew steadily
throughout the year to reach 2.2 million,
an increase of 12 per cent from 2011, and
the best acquisition figure since 2010.
The investment in upgrading the
Nawras network, which will generate
more broadband data across a much
wider spectrum, will benefit many of
these new customers with a faster
and higher-quality service.
20 million
2008
2009
2010
2011
2012
Revenue Contribution
8.4%
91.6%
Mobile (OMR 177 million)
Fixed line (OMR 16 million)
OMR
180m
Total Equity
Annual Report 2012 |
7
Operational Highlights of 2012
What does your
business need?
97%
I nvestments in new technology increased
capacity substantially and brought the
Nawras 3G+ network within reach of more
than 60 per cent of the population – expected
to rise to 97 per cent once the turbocharging
programme has ended.
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| Nawras – Omani Qatari Telecommunications Company SAOG
2.2m
The total number of Nawras customers
exceeded 2 million, following growth for
four consecutive quarters.
In partnership with Tata Communications,
we launched a range of international
services, including the Sultanate’s first
Global Virtual Private Network (GVPN),
to offer multinational companies secure
international digital communications
to more than 200 of the world’s main
business hubs and data centres.
In 2012 we began an extensive
programme to turbocharge our network,
upgrading our systems to meet the
massive surge in demand for broadband
and other services now and in the future.
68%
Nawras secured a 68 per cent
share of the growing market for
prepaid BlackBerry usage.
ä
63%
Nawras’ fixed service customer base
rose by 63 per cent in 2012.
Nawras expanded its national backbone
infrastructure to more than 5000
kilometres of fibre and microwave
backbone, and will continue to invest
in and expand this core infrastructure.
An exclusive marketing agreement with
WhatsApp, the world’s leading crossplatform mobile messaging service, gives
Nawras an opportunity to target more
than one million WhatsApp customers
in Oman with new services.
Nawras was the first telecoms company
in Oman to showcase the latest 4G LTE
ahead of its launch.
Annual Report 2012 |
9
Board of Directors’ Report
How do we
generate great
shareholder returns?
Dear Shareholders
On behalf of the Board of Directors, I have pleasure in
presenting the 2012 annual report of Omani Qatari
Telecommunications Company SAOG “Nawras”.
Here in Oman, the Government’s positive attitude to business is
allowing companies to operate and flourish in an environment of
continuing stability. The continuing strong national economy has
attracted an increasing number of regional and international
firms keen to establish operations in the Sultanate, and to
capitalise on the many opportunities here.
Nawras has maintained its unwavering commitment to investing
in the best available technology for the benefit of our customers.
This is a cornerstone of the Company’s operational strategy and
will continue into 2013 and beyond. Additionally, 2012 saw
considerable efforts focused on re-energising our customer
experience. This involved significant investment in programmes
aimed at improving our understanding of our customer needs.
This investment will continue through 2013 and will result in
continued enhancements to our customer experience.
In our third year as a public company, gross consolidated revenue
was OMR 193.5 million (2011: OMR 196.9 million), yielding net
profits of OMR 37.0 million after taxation. Earnings per share
equated to OMR 0.057.
10 | Nawras – Omani Qatari Telecommunications Company SAOG
Nawras has maintained compound annual revenue growth of
45 per cent since the Company started operations in 2005. This
achievement enables the Board to recommend that shareholders
approve, at the AGM on 27 March 2013, a dividend of OMR 0.038
per share (38 baisa), which represents a yield of 8.2 per cent on
the Company’s share price at the close of 2012.
Our focus in 2012 was on: new customer-driven initiatives;
delivering the technology to increase customer choice; and
to bring telecoms, media and data to a larger percentage of
our population. In addition, we made substantial investments
in people training and development.
By year end, for example, our plans to turbocharge our
network with the introduction of 4G LTE, the latest wireless
communications standard, were well-advanced, while the
opening of our new flagship store in Muscat Grand Mall further
enriched the customer experience, raising our brand’s profile
among new and existing customers.
These important milestones would not have been realised
without the dedication and contribution of the entire Nawras
family – our human capital – that is the foundation of the
Company’s on-going success. I offer my sincere thanks to them
all for their contributions during 2012.
Their outstanding team effort resulted in continued steady
growth in total customer numbers across all Nawras’ services.
I am pleased to report that, as in previous years, our industry
peers, the media, and other groups recognised this effort by
honouring us with a number of prestigious awards covering
customer service, technology, investor relations, and people
and training initiatives.
As a Board, we also owe a considerable debt of gratitude to the
Qtel Group, our major shareholder, for helping Nawras realise
a number of important operational and financial goals for the
year. The Group’s support is greatly appreciated and evidence
of a very solid partnership.
On behalf of the Board of Directors, I offer my thanks to our
shareholders, customers and partners for their trust and
commitment. I join my colleagues in also acknowledging
the considerable support of the Ministry of Transport and
Communications, the Telecommunications Regulatory
Authority (TRA), the Capital Market Authority (CMA) and
Muscat Securities Market (MSM).
In closing, I offer my heartfelt gratitude to His Majesty Sultan
Qaboos bin Said, may God protect him. Our leader’s vision and
wisdom has been the driver for the emergence of Nawras as
one of the Sultanate’s premier communications providers.
“ Nawras has maintained its
unwavering commitment
to investing in the best
available technology
for the benefit of our
customers.”
Sayyed Amjad Mohamed Al Busaidi
Chairman
Annual Report 2012 |
11
Board of Directors
Sayyed Amjad Mohamed Al Busaidi | Chairman
Mr Al Busaidi has chaired the Nawras Board since March 2011. In 1990
he joined the Diwan of Royal Court and he currently serves as Executive
President of the Diwan of Royal Court Pension Fund. He was appointed
Chairman of Bank Nizwa in July 2012, and also serves on the boards of
NIFCO, National Mass Housing Company, and Shomookh Investment.
He has a Master’s degree in Business Administration from Southern
Cross University (Australia).
Sheikh Saud Nasser Faleh Al-Thani | Vice-Chairman
Sheikh Saud joined Qtel in 1990 and is currently Chief Executive Officer of Qtel
Qatar. He also serves as Executive Director of Group HR and Acting Executive
Director of General Services. He is also a member of the Arab Organisation
for Satellite Communication. Sheikh Saud has a Bachelor of Arts in Public
Administration from Western International University (USA).
Mr Saleh Nasser Al-Riyami | Director
Mr Al-Riyami has been a member of the Nawras Board since the Company’s launch. He has more
than 20 years’ experience as the Investment Expert for the Diwan of Royal Court and currently
serves as the General Manager of National Mass Housing SAOC. He has also served as founder
or director of many companies in Oman, as well as in managerial positions in the Ministry of
Commerce and Public Authority of Social Security in Oman. Mr Al-Riyami is a Board member of
Taageer Finance Company and Al Madina Insurance Company. He holds a Bachelor of Science
in Business Administration from the University of Georgia (USA).
Mr Mohamed Jassim Al-Kuwari | Director
Mr Al-Kuwari has been Qtel’s Chief Corporate Services Officer since 2011, having held
several positions in the Group since 2005: Head of Talent Sourcing, Senior Manager of
Manpower Planning and Talent Sourcing, and Assistant Director of Policy Development
and HR Services. He was also appointed Executive Director, Group HR in 2011. Previously,
Mr Al-Kuwari worked at Ras Laffan Liquefied Natural Gas. He holds a Bachelor of Science
in Business Administration from the American University, Washington (USA).
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| Nawras – Omani Qatari Telecommunications Company SAOG
Mr Ghassan Khamis Al Hashar | Director
Mr Al Hashar joined the Nawras Board as a representative of the Public Authority for Social
Insurance (PASI) in 2011. He is currently the Authority’s Head of Asset Management – Local.
He has more than 15 years’ experience in finance and investment management and
represents PASI on the boards of numerous public and private companies. Mr Al Hashar
is currently Chairman of Bank Muscat’s Fund Investors’ Committee and a Board member
of Majan Development Company. He holds a Master’s Degree in Finance and Investment
Management from the University of Aberdeen (UK).
Mr Khalil Ibrahim Al Emadi | Director
Mr Al Emadi is currently the Chief Executive Officer of Navlink lnc (one of Qtel’s partners). He has a
strong background in telecommunications with 27 years of experience in mobile services and fixed
telephony. Before joining Qtel, he worked at the Ministry of Transport and Communications. He was the
Executive Director of Wireline Services until 2007 when, as part of an organisational restructuring, Qtel
merged the previous Wireless and Wireline groups into the Networks Division, appointing Mr Al Emadi
as Executive Director of Networks. He has a Bachelor of Science in Electrical/Electronic Engineering
from Northrop University in California (USA).
Dr Shaikha Sultan Al Jabir | Director
Dr Al Jabir is currently Executive Director – New Businesses in Qtel Group (QG).
Before joining QG, she was CIO of Qatar General Electricity and Water Corporation
(Kahramaa), where she established a sophisticated ICT infrastructure, helping to
put the organisation at the forefront of technology. She holds a PhD in Computer
Science from the University of Surrey (UK), an MS in Telecommunications and
Computers from George Washington University (USA), and a BS in Electrical
Engineering from Kuwait University.
Mr Said Faraj Al Rabeea | Director
Mr Al Rabeea joined the Nawras Board in 2011. He has worked in the government
sector for more than 30 years, during which time he has held a number of senior
positions in human resources, information technology, and telecommunications.
He currently sits on a number of a government boards in Oman. He has a Bachelor’s
Degree in Business Administration.
Mr Mohanna Nasser Al Nuaimi | Director
Mr Al Nuaimi was appointed Group Chief Human Resources Officer of Qtel Group in
2008, after serving as Qtel Qatar’s Executive Director of Group Human Resources. He
is a member of Qtel Group’s Management Committee and a Board member of several
other Qtel Group companies. In 2009, Mr Al Nuaimi received the HR Leadership Award
on behalf of Qtel Group for the World HRD Congress, an international honour for
companies excelling in the field of people management. He holds a Bachelor of Science
in Mechanical Engineering from Qatar University.
Annual Report 2012 |
13
Management Review
What did
we achieve
in 2012?
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| Nawras – Omani Qatari Telecommunications Company SAOG
“ 2012 was marked by seismic
changes in the country’s
telecoms industry and in
telephony provision.”
Ross Cormack
Chief Executive Officer
Renewed customer focus and state-of-the-art technology
were the main highlights of 2012, contributing to a year in
which Nawras demonstrated its ability to capitalise on the
many opportunities presented by the rapid transformation
of communications in Oman.
There can be no question that we witnessed the end of the
beginning of the data revolution, a period which has seen Nawras
move from a traditional telecoms operator to a data-centric
company supported by a full IP network, serving customers with
data, media and technology.
This marks a significant step towards realising the vision of
Qtel Group, our majority shareholder, and is an extraordinary
achievement considering that Nawras has been operational
for only eight years.
Another noteworthy initiative was the research we conducted to
give us detailed market intelligence. The outcome of this was a
three-step programme: Researched, Analysed and Took Action.
This has underpinned the revitalisation of our business proposition,
with the introduction of new products, services and tariffs, and in
effect supported the adoption of a new business model that is
much more attuned to evolving customer needs.
The analysis has given us the ability to develop innovative
strategies for customer acquisition and retention, a key advantage
in a market that is set to become much more competitive, and to
focus even more on making our customer experience dynamic,
rewarding and different.
On the back of these far-reaching initiatives, it is pleasing to report
that our customer numbers continued their upward trend during
the year, the best acquisition since the third quarter of 2010. We
now have approximately 2.2 million customers, an increase of
more than 11 per cent on 2011.
The grassroots review of our operation also examined how we
could enhance the dialogue with our independent distributors,
who are important to our sales effort. We have now put in place
a programme to work more closely with our top dealers and
sub-distributors, to ensure more proactive merchandising, as
well as to monitor efficiency. Their feedback has proved invaluable
in helping us to shape and refine our sales strategy.
The explosive growth in data has driven the telecoms revolution
in recent years: the demand for data-based services, particularly
from under-25s who account for approximately half of the
country’s population, has fuelled this growth.
Our recognition of the importance of this youth market helped
us to create really powerful youth-friendly strategies. These are
designed to capitalise on the surge in data usage, yet must be
adaptable enough to accommodate more smart phones on our
network, using video through sites like YouTube and data apps like
WhatsApp, the leading cross-platform mobile messaging service
in Oman and globally. The exclusive agreement we signed with
WhatsApp made Nawras just the eighth operator worldwide to
enter into such a relationship.
Nawras was the only Middle Eastern telecoms company to be
shortlisted in Ragan’s PR Daily Digital PR and Social Media Awards
2012 in the ‘Best Use of Facebook’ category. This is a ringing
endorsement of our youth communications strategy, and
commitment to dynamic social media interaction, which resulted
in 81,179 ‘fans’ on Facebook and 400,000 interactions between
us and customers on Facebook and Twitter, by the end of the year.
In continuing our support for the community, the Company joined
forces with Kickworldwide and the Oman Football Association to
support a grassroots football programme. This was one of several
exciting initiatives to bring our country’s youth and communities
closer together.
We will continue to maintain our high profile in sports and
community activities in the long term, and are proud to support
the health and well-being of Omani citizens in this way.
Working with two of the Middle East’s best-known and successful
sportsmen – Ali Al Habsi, the Oman and Wigan goalkeeper, and
Ahmad Al Harthy, champion Omani racing driver – brings our brand
directly into the community and reinforces our commitment to
sport. We also sponsored a number of major sporting events
throughout the year, including the Muscat Regatta 2012, as
platinum sponsor, and Summer of Sports organised by the
Ministry of Sports.
Since the first Goodwill Journey in 2005, Nawras has reached out
to more than 7,000 individuals and families. We have visited more
than 150 charitable organisations and NGOs, travelling 48,000
kilometres during the Holy Month of Ramadan to bring joy to the
people of Oman.
We continued to support Government initiatives and made Nawras
even more business-friendly, our launch of bulk SMS packages and
Maktabi Mobile for small and medium sized businesses being
good examples of this. We remain committed to the development
of a telecoms infrastructure that supports Oman’s growing
international commercial ambitions, and reflects its strategic
geographic location.
The contribution of Oman’s Telecommunications Regulatory
Authority (TRA) in this respect – particularly the release of new
frequencies – was no less far-reaching. The TRA has shown
substantial support for our industry by easing regulatory constraints,
promoting a vision of broadband for all, and maintaining an
environment that supports investments.
Membership of the Qtel Group brought experience and muscle to
support the modernisation of the Nawras network, as well as the
launch of new customer services and shared people training and
development initiatives.
Our new flagship store features a
lounge where our business customers
can access the latest telecoms
technology to stay connected.
Annual Report 2012 | 15
How can we
best serve Oman?
Management Review Continued
We contribute to the development of our country by providing the
technology and services that help business and people communicate
effectively - wherever they are.
16
2010
2011
2012
New era for
fixed services
First sea
cable landed
Turbo
charged
Fixed services launched for
business and residential
customers, a new era for
broadband accessibility in
the Sultanate.
The first sea cable landed
as part of the Tata Global
Network - Gulf cable project
and fibre-to-the-home
(FTTH). Broadband speeds
of up to 100Mbps trialled.
Turbocharging our network
continues and we demonstrate
4G LTE Mobile broadband for
the first time in Oman.
| Nawras – Omani Qatari Telecommunications Company SAOG
4G
Annual Report 2012 |
17
Management Review Continued
The under 25s market
Oman has one of the youngest populations in the
region, with approximately 30 per cent between the
ages of 15 and 24. This is expected to grow to nearly
40 per cent by 2020 and has become a key target
market for Nawras.
Over the past three years, we have used in-depth
research to develop award-winning youth products
and services, with a particular focus on accessing
music and social media from mobile phones.
Our Shababiah product, for example, has quickly
become a market leader, thanks to its competitive
tariffs and easy access to social media.
We have also formed exclusive strategic partnerships
with WhatsApp and Universal Music to launch
services which have caught the imagination of
our younger customers. Initiatives like these have
served to consolidate our leadership position in
the youth market.
We intend to build on this successful strategy
during 2013 and beyond by continuing to bring our
customers the best content from the best providers.
30% 40%
Omani population in 2012
between 15 and 24 years old
Expected increase in 2020
1m
One million Omanis
using WhatsApp
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| Nawras – Omani Qatari Telecommunications Company SAOG
Our deal with WhatsApp
In November 2012, we entered into a strategic
partnership with WhatsApp, the leading social
media chat service, to offer exclusive branded
plans to our customers.
There are currently more than 1 million
customers in Oman using WhatsApp. This
number will continue to grow - in parallel with
the increase in the number of mobiles that can
connect to the Internet - and as ‘chat’ moves
from traditional SMS to ‘Instant Messaging’
over the Internet.
2012 was marked by seismic changes in the country’s telecoms
industry and in telephony provision. Where competition was previously
based around infrastructure and scale, access and service provision is
the new territory now being fought over.
But Nawras is prepared for these fresh challenges, having started to
turbocharge our network infrastructure, and upgraded our systems
to meet the massive demand for broadband and other services now
and in the future.
Cherishing our customers – new and old
An organisation that receives an average of 10,000 calls a day is
clearly in the public eye, so customer satisfaction is, and will continue
to be, the cornerstone of the Nawras philosophy.
Our own research indicates that 82 per cent of our customers are
happy with their experience, but we are working hard to improve this
figure through a number of customer initiatives that we expect will
deliver results in 2013.
A determination to build on this customer-centric culture, which has
quickly become part of our DNA, was a feature of the year. Customerfacing companies like Nawras need to evolve, stay nimble, exceed
expectations and convert customer promises into actions.
So we focused heavily on addressing three key issues: offering more
personalised choices, enriching the customer experience, and making
the customer journey more engaging and exciting. A Customer
Experience Programme provided the impetus for these initiatives.
Although Nawras has a reputation for listening, we still carried out
a far-reaching analysis of usage patterns to better understand how
our market is segmented, so we could make more personalised
offers to existing and potential customers.
We carried out hundreds of interviews and activated many focus
groups in order to better understand how our customers view the
‘Nawras experience’. One of our objectives was to use this information
to strengthen loyalty to the brand. The full impact of this exercise will
be felt in the first half of 2013.
A complete re-evaluation of all our customer touch points and points
of sale resulted in the commitment of further resources to up-skilling
our family of sales and customer champions, and equipping all our
front-line people with the tools necessary to help our customers.
A suite of exciting new offers further served to re-energise the
customer experience.
The opening of the Nawras flagship store at Muscat Grand Mall at the
end of the year marked an important breakthrough for the Company,
and one that we are confident will quickly earn ‘best in class’ status
among Oman’s retailing businesses.
This shift from transaction-based to relationship-based retailing is an
interesting development in the customer journey. We expect this trend
to continue, particularly with the increase in new apps and data services.
We received the strongest possible endorsement for our customer
initiatives, winning Best Customer Strategy at Telecoms World Middle
East; Best Loyalty Programme Award at the CMO Asia Awards 2012;
Telecoms Sector Winner at the Oman Customer Service Excellence
Awards; and the CommsMEA Award for Customer Service Provider
of the Year. We are delighted to have been nominated to receive
these prestigious awards.
However, while we are confident that our initiatives have put us
on track to deliver customer satisfaction consistently, we will not
rest. Our aim is to become the benchmark for positive consumer
relationships, not just in the telecoms sector, but for industry in
Oman generally. Customer growth in successive quarters this
year is an encouraging step towards achieving this ambition.
The Nawras family
In promoting his vision for Oman’s on-going development, His
Majesty Sultan Qaboos bin Said also emphasised the importance
of the contribution that people could make individually. Nawras
continued to play a valuable role in this process, not only as one
of the country’s major employers, but in helping people get closer
through the power of communications.
The Company has always taken very seriously its duty of care to develop
the skills of Omani nationals in the workplace, so we welcome the news
that the number of Omani managers doubled during the year, giving
deserved promotions to some of our most promising people.
We sought to promote our talent wherever possible, so also
appointed a number of new line managers – people changes that
reflect the Company’s move to a more lifestyle-focused model,
based on quality service.
Our HR teams worked to define clear career paths for our sales
and store people, a major accomplishment among a number of
other milestones that were reached during the year. We organised
a two-day ‘All Hands’ gathering, which brought everybody in the
Company together to celebrate our achievements, set shared goals
for the year ahead, and underscore the importance of outstanding
customer experience.
In close collaboration with our colleagues in Qtel Group, we formed
a new People Experience Department, to make work more rewarding
and motivating for all Nawras family members. The Department is
responsible for conducting motivational and awareness workshops,
communicating benefits and managing weekly team activities.
We received further recognition for our HR policies, winning the
category for the Best Organisation with Innovative HR Practices
at the 2012 Asia Pacific HRM Congress Communications Awards.
In progressing towards the adoption of international best practice
across a number of operational areas, we developed a template for
a more performance-based culture, only deploying staff with the
right skill sets for specific roles and rewarding them accordingly.
A central plank in our HR strategy is to customise training to develop
national talent, since it ensures long-term stability and continuity.
We will continue to invest in specialist workshops, seminars and
events, such as ‘Me and My Customer’ and ‘Me and My Manager,’
which are typical of the effort we devote to up-skilling people
throughout the organisation.
Looking ahead, we intend to act on His Majesty’s call to change
perceptions of the private sector. Our recruitment message is clear:
the private sector offers similar opportunities to the public sector;
has high standards of training and development; is well remunerated;
and individuals can have great fun and make a real and positive
contribution to the country’s future commercial success by working
for leading companies like Nawras.
Annual Report 2012 | 19
How can we
work smarter?
Management Review Continued
We re-evaluated our customer touch points and
points of sale, resulting in the commitment of further
resources to up-skilling our family of sales champions.
20 | Nawras – Omani Qatari Telecommunications Company SAOG
One
team
We work together as one team,
equipping our front-line people
with the tools necessary to help
ensure our customers receive
the best possible service.
Annual Report 2012 |
21
Management Review Continued
Our goal is to become the benchmark in
Oman for positive customer experiences
and overall satisfaction, with a target of
97 per cent of happy customers.
The growth in customer numbers to
2.2 million during 2012 was matched by
rising customer satisfaction, reaching 85
per cent, but we will continue to strive to
offer the ultimate customer experience.
97%
2.2m
Growth in customer numbers
Our goal is to achieve even higher levels
of customer satisfaction, in line with
growing our overall customer base.
85%
12
22 | Nawras – Omani Qatari Telecommunications Company SAOG
13
Turbocharging our technology
Turbocharging has now laid the foundations to support future
technologies and, in effect, to future-proof the Company.
The release of spectrum under Oman’s National Broadband Strategy
will mean that we can provide a faster and better data experience,
as the use of a second carrier for the 2100 spectrum means that
we have another lane to our 3G data highway. Further, the TRA has
provided us with the spectrum for 4G (LTE), which will lead to even
faster speeds and less latency in areas where it is deployed.
It has proved to be the best possible solution in allowing us to evolve
our network in response to rapidly changing market conditions. This has
involved upgrading all 2G sites to 3G+, boosting speed and capacity,
and finalising plans for the launch of 4G LTE at 1800 MHz, which will
make the very newest technology available to our customers.
The TRA’s approval for additional spectrums will double the data
capacity and create a network to meet the evolving demands of
customers. We continue to support the TRA in its ambition of bringing
telephony services to remote areas.
Nawras expanded its national backbone infrastructure to more than
5,000 kilometres of fibre and microwave backbone, and will continue
to invest in and expand this core infrastructure.
Nawras has also swapped out and expanded parts of its core network
to cope with the increase in data traffic. This equipment was deployed
in our new state-of-the-art Data Centre located in Muscat, of which the
first phase was completed in September 2012. Further, we continue to
support our business customers’ facilities by deploying fibre to more
and more buildings, as well as to our business customers wherever
they may be located in Oman.
WiMAX is a technology that has proved successful with more than
40,000 customers, an increase of 63 per cent on 2011, and we
also intend to roll out plans for further Home Broadband and
Voice services lines.
The year witnessed a massive growth in data applications and usage,
demanding forensic capacity planning and forecasting. We expect no
let-up in this phenomenon into 2013 and beyond, but remain confident
that the programme of investment in new technology will feed through
with a substantial increase in the number of base stations.
The upsurge in data usage prompted a dramatic increase in datarelated revenues. Another significant financial highlight was real,
substantive growth in international traffic. Continued growth in data
revenues is on track to compensate for the decline in SMS revenues,
which was reported previously and is a symptom of the industry’s
natural migration towards data services.
The Turbocharging Programme will increase capacity and bring
the 3G+ network within reach of 97 per cent of the population by the
end of the Turbocharging Programme in 2015. Improving our 3G+
network, redeploying existing equipment wherever possible is, and
will continue to be, a consideration for our technology teams.
Three further units in our IT department achieved ISO 2700
certification during 2012, confirming that Nawras’ information
handling, processing and storage is aligned to best international
practice and ensures security and consistency. Our IT department
also received ISO 27001 certification for secure data storage and
handling, making Nawras one of the first companies in the Sultanate
to be granted ISO status for its entire IT Department.
While we are closer to our ambition of operating at the cutting
edge of technology, nothing will distract us from our primary goal:
harnessing its power and resources to improve communication and
data services for the benefit of our existing and future customers.
Turning challenges into opportunities
Our future is one of immense potential and growth. The challenge –
and opportunity – is to provide communications access to the
majority of the population; to reduce operating costs while investing
to maintain our market position; to retain existing customers; and
to welcome new ones.
Our opportunity – and challenge – is to harness the huge untapped
potential among customers currently not making use of data services
with exciting, cost-effective offers; to encourage existing customers to
spend more; to acquire new, higher-spending customers; and to make
better use of the network by offering customers off-peak data bundles.
Partnerships with manufacturers and application providers will
feature strongly in the next phase of the Nawras evolution. We are
already working side by side with Tata Communications to offer a
comprehensive range of international services, including the first
Global Virtual Private Network (GVPN) in Oman. These alliances will
undoubtedly help create efficiencies and economies of scale, and
speed the time to market.
Revenue and network sharing, with regional or international
partners, offers further exciting options once these are assessed
as being in the best interests of our stakeholders.
Over 400 base stations were upgraded during the year, the latest
phase in an ongoing logistical and financial commitment by the
Company. Such substantial investments are but various stages on
the journey towards achieving the wider coverage and capacity
footprint that is now firmly within our grasp.
While we do not underestimate the scale of the task ahead, we
are confident in our ability to realise the TRA’s strategy for Oman.
Nawras firsts
Continued emphasis on making our customers’ lives easier and
increasing their choices saw a number of notable firsts in social
media, apps and data: the Facebook SMS service; new data bundles,
including an off-peak monthly mobile broadband bundle; a free SMS
notification service to show data usage when roaming; an SMS news
service in association with Reuters; and international credit transfer.
We showcased the latest 4G for the first time in Oman; were one of
the first companies to obtain ISO status for its entire IT Department,
with the award of ISO 27001 certification for secure data storage and
handling; and our flagship store in Muscat Grand Mall opened at the
end of the year – the first of its kind in the Sultanate.
The introduction of a fixed number portability (FNP) service in Oman
gives our business customers the opportunity to keep their existing
numbers when joining Nawras from another telecommunications
operator. Additionally, the first Global Virtual Private Network (GVPN),
in association with Tata Communications, offers multinational
companies global reach, via our domestic network, to more than
200 of the world’s main business hubs and data centres.
Awards
Over the years, Nawras has achieved widespread industry recognition
by receiving a remarkable variety of awards, and 2012 was no exception.
In addition to the customer service awards noted earlier, our other
awards were for Best Merchant Kiosks Services (Bank Muscat Partners
Progress); Top Brand – Popular Choice of Telecom Service Providers
and Top Brand – Management Choice of Telecom Service Providers
(Business Today – Best Brands Survey); Oman’s Largest Corporates
2011 – Top 10 (Oman Economic Review); and Best Corporate Website
2012 Oman – Investor Relations (KWD Webranking).
Our ‘7x7’ Facebook competition was shortlisted in Ragan’s PR
Daily Digital PR and Social Media Awards 2012 in the ‘Best Use
of Facebook’ category, having impressed the judges with our
innovation, ability to engage with customers and the lasting
impact of the promotion. Nawras was the only Middle Eastern
telecoms company to be shortlisted.
We were also recognised as Best Organisation with Innovative HR
Practices at the Asia Pacific HRM Congress Communications Awards
and received an Al Mar’a Excellence Award for Technology.
Acknowledgements
Our values – to be caring, excellent and pleasingly different – are
worth restating in the context of this review, because they guided
every one of us in the organisation and influenced key Nawras
initiatives during the year.
It is a mark of a company’s maturity to be able to accept rapid
change and adapt accordingly. We achieved this, meeting the many
challenges of the year with the customary resolve and focus on
customers that have become our trademark.
We can now celebrate that achievement and look forward to
the year ahead when, as before, we will pull together as one team
in the interests of our customers, this great Company and its
many stakeholders.
Ross Cormack
Chief Executive Officer
Annual Report 2012 | 23
How do we grow
the Nawras brand?
We focus on making every interaction with our
customers as pleasant as possible. Our aim is to
become the benchmark for positive consumer
relationships, not just in the telecoms sector,
but in Oman generally.
1.4m
Elite Program
More than 1.4 million
customers joined our
Elite Program.
Rewarding
loyalty and
commitment
Our Elite Program is a
points-based reward
scheme designed to build
long-term relationships
with our residential and
business customers and
to recognise their loyalty.
1,100
Brand Ambassadors
Customers visiting our new flagship
store in Muscat Grand Mall are greeted
by a Brand Ambassador who welcomes
them, asks their requirements and then
directs them to the appropriate zone
or sales pod where an expert Sales
Champion can provide assistance.
24 | Nawras – Omani Qatari Telecommunications Company SAOG
Every single member of the
Nawras Family – our staff – is an
official ambassador for the brand.
Community
Working with two of the Middle East’s
best-known and successful sportsmen
– Ali Al Habsi, the Oman and Wigan
goalkeeper, and Ahmad Al Harthy,
champion Omani racing driver – brings
our brand directly into the community
and reinforces our commitment to sport.
72,000
‘likes’ on Facebook,
and counting...
A key element in our
brand strategy is the
under-25 market, which
accounts for almost half
the country’s population.
400,000 interactions with our
customers on Twitter and counting...
97%
Customer satisfaction
We are raising the bar to
reach our target of 97 per
cent happy customers.
Prompt and efficient handling of
more than 10,000 enquiries a day
helps make customers’ lives easier
and strengthens loyalty to the brand.
The new website highlights our core
brand values by being customer-friendly
and encouraging positive interaction
with businesses and consumers. We
have also introduced an audio facility,
in Arabic and English, to help customers
who are visually impaired or dyslexic or
who have reading difficulties.
Annual Report 2012 | 25
Executive Management
Ross Cormack
Chief Executive Officer (CEO)
Ross has been CEO of Nawras since 2004 and has more than 25 years
of experience in the telecommunications industry, having led four different
telecommunications companies, served on the Board of Directors of six
companies, and shareholder-managed 16 companies across Europe, the
Middle East and Asia.
Said Safrar
Chief Customer Experience Officer (CCXO)
Said has worked for Nawras since 2008, originally
as the Customer Service Director. He was appointed
to his new role as Chief Customer Experience Officer
in September 2011, as part of the Company’s focus
on customer experience.
James Maxwell
Abdulla Issa Al-Rawahy
Chief Strategy Officer (CSO)
Abdulla has been Chief Strategy Officer of Nawras since 2008 and has over
30 years of experience in the telecommunications sector, with leading roles
in network planning and projects, and strategy and corporate business
development for both fixed and mobile telecommunications.
General Counsel (GC)
James joined Nawras in 2007 and has over 15
years’ experience in providing legal and regulatory
advice to leading corporates, with 10 years working
exclusively in telecommunications.
26 | Nawras – Omani Qatari Telecommunications Company SAOG
Hussain Al-Lawati
Chief Government Relations Officer (CGRO)
Hussain joined Nawras in 2004 as a Section Head
– Key Account Manager – Business Sales Head.
Prior to Nawras he served at Oman National Dairy
Products, British Petroleum Oman, and Mehdi Foods.
John Vickerman
Jorgen Latte
Wolfgang Wemhoff
Kumail Al-Moosawi
Director of People (DP)
Martin Lyne
Chief Marketing Officer (CMO)
Sean Casey
Chief of Sales and Distribution (CSD)
Kumail has been with Nawras since 2004 and
brings over 13 years’ experience in numerous
business functions that include retail, operations,
finance, customer service, audit, and human
resources management.
Martin joined Nawras in 2012, bringing over
20 years of commercial experience. He was
previously Consumer Commercial Director
of Orange UK, which achieved the fastest growth
of any operator launching fourth to market.
Sean joined Nawras in 2012. He has over 15
years’ sales and managerial experience in the
telecommunications sector in Australia, Saudi
Arabia and now Oman.
CEO Advisor
John has more than 25 years’ experience with
a number of high-profile global telecoms and
media companies, including the first wholly
owned 3G mobile business in Europe of which
he was founder director.
Chief Financial Officer (CFO)
Jorgen has been Chief Financial Officer of Nawras
since 2009. Jorgen has almost 20 years of financial
and managerial experience in the telecommunications
sector, with 10 years in stand-alone CFO roles for
mobile services companies.
Chief Technology Officer (CTO)
Wolfgang joined Nawras in 2011 and has more than
20 years of experience in the telecommunications
industry, working for Mannesmann and Vodafone.
He had leading roles in Vodafone Germany, in
Vodafone Group, and recently in Vodafone Turkey.
Annual Report 2012 | 27
How do we engage
our many fans?
Sponsoring music concerts and sporting events
associates Nawras as a popular, youth-friendly
brand in the minds of our country’s young people.
28 | Nawras – Omani Qatari Telecommunications Company SAOG
Social media such as Facebook and
Twitter feature strongly in our
communication to 16-25 year olds.
Annual Report 2012 | 29
Nawras in the Community
How can we serve
our community
better?
Corporate Social Responsibility (CSR) comes naturally to
Nawras and is now firmly embedded in our culture. We serve
the community both as employer and partner, sponsoring and
supporting initiatives that go well beyond the norm in terms
of their scope and positive impact.
Our engagement with the community embraced sponsorship, or
support, for an extraordinary range of interests, events and causes.
These included health (National Association of Cancer Awareness);
employment (JOBEX); IT (Comex); sailing (Muscat Regatta); tourism
(Salalah Tourism Festival); and arts and culture (Muscat Festival,
Sohar Music Festival), as well as the less abled, the environment
and many more.
Further, the Company’s active involvement in the community recognises
no political or geographical boundaries. We continued to work with
government ministries, NGOs and voluntary organisations with the
sole aim of bettering our society for the benefit of others less
fortunate or able.
This approach has served to create a level of interaction with our
community – and, therefore, many of our customers – that goes well
beyond the simply transactional, leading to a level of relationship that
bonds us more closely and naturally than many other organisations.
Our Nawras Goodwill Journey is a prime example of this. Now in
its eighth year, a group of fasting volunteers visited different charitable
organisations across the country, over a ten-day period, to make
essential donations which will have an enduring impact because
they meet real local needs.
30 | Nawras – Omani Qatari Telecommunications Company SAOG
Since the first Goodwill Journey in 2005, Nawras has reached out
to more than 7,000 individuals and families. Our volunteers have
visited more than 150 charitable organisations and non-government
organisations in the Sultanate, travelling 48,000 kilometres to bring
joy to the people of Oman during the Holy Month of Ramadan.
Another highlight was our agreement with Kickworldwide, an
organisation committed to ‘changing lives through football’. It is
tasked with creating social awareness among young people, leading
to a new employment stream for Omani nationals, including coaching,
refereeing, sports science and law, journalism, and photography.
In December alone, we sponsored and supported the Muscat Youth
Summit 2012, the first GCC Businesswomen’s Forum, and Oman Debate
2012, maintaining our commitment to engage with the local
community and customers at every level.
While we continued to enjoy a strong profile as a result of our wideranging association with sporting and other events, the Company’s
less public initiatives proved to have no less powerful an impact.
The SMS Charity Donation Service – also in its eighth successful
year – proved, once again, the perfect marriage of technology,
convenience and charitable giving, by enabling customers to make
donations via SMS to Oman Charitable Organisation (OCO).
We have always recognised the role of women in our workplace.
We are proud to be an equal opportunities employer and to reward
the contribution of our female staff at many different levels. This
included appointing nine of our most talented women to senior
roles as store managers during the year.
A private-public partnership between
Nawras and Oman’s Ministry of
Education (MoE) uses technology to
support education, successfully
linking the Ministry and every state
school with a fast internet connection
– meaning faster access, improved
web browsing and data connectivity,
and enhanced study support.
Faster Internet access benefits young
students by helping them with their
studies, and also allows their parents
to monitor progress.
150
The number of charitable
organisations in Oman visited by
Nawras volunteers since the annual
Goodwill Journey started in 2005.
We marked the third Omani Women’s Day with a colourful
celebration, during which we showed Nawras family members a
specially commissioned video highlighting the impact of Nawras
women in the Company, as well as their contributions to family
life and small businesses.
We also run the ‘Springboard’ programme in collaboration with the
British Council, as part of a long-term commitment by us to empower
women. This course enables women to grow their potential in the
Company and community by giving them the confidence and skills
to achieve their professional and personal goals.
To date, there have been more than 85 Nawras Springboard
graduates, a statistic of which we are very proud.
Our duty of care to the community also extends to the environment
and our impact upon it.
We are a member of the Environment Society of Oman and support
the global drive for the preservation and responsible consumption
of the world’s natural resources.
We backed that support with our participation in Earth Hour 2012
for the third consecutive year, ensuring that lights and all nonessential electrical appliances in the Nawras Campus, multimedia
contact centre, and all 26 stores across the country were switched
off for an hour, a tangible effort to reduce our carbon footprint.
Further ‘green’ initiatives include encouraging our customers to
switch to electronic bills instead of paper ones and to use e-recharge
through 75 convenient self-service machines located across the
Sultanate. We also promoted mobile-to-mobile credit transfer
as another way to avoid the use of plastic recharge cards.
A good corporate citizen is judged on many fronts, including its
role in the community. For Nawras, 2012 reinforced the Company’s
reputation in this respect, but also shaped the lasting legacy that
is a hallmark of a strong and effective CSR policy.
That legacy is already taking many forms: improving fitness and
health through our support for sporting activities; simply bringing
people closer together to strengthen communities; boosting
knowledge and education; generating well-being and a sense
of belonging; and, through our various local programmes, giving
communities the means to thrive.
Our proactive engagement with the community is now widely
acknowledged. Its value to the Company cannot be overstated,
since every member of the Nawras family benefits from the
common goals and sense of purpose that it gives them as part
of their daily working lives.
We will continue to be a responsible, caring Company by maintaining
the high level of commitment to our community through an association
with sporting, cultural and social events, for the benefit of the wider
community and the country as a whole.
Annual Report 2012 |
31
Financial Review
Total customers grew steadily throughout
the year to reach 2.2 million, an increase
of 12 per cent from 2011 and the best
acquisition figure since 2010.
Encouraging growth across all customer segments, record
revenue in the last quarter, and growth in mobile and fixed data
revenue combined to offset a small decline in full-year revenue.
The 1.7 per cent decline in full-year revenue, to OMR 193.5 million from
OMR 196.9 million in 2011, was driven by a reduction in SMS and on net
voice revenue. However, Q4 revenue from international voice, and
fixed and mobile data helped the company to achieve record quarterly
revenue of OMR 51.4 million, compared to OMR 50.8 million in 2011.
Total customers grew steadily throughout the year to reach 2.2
million, an increase of 12 per cent from 2011 and the best acquisition
figure since 2010.
The investment in upgrading the Nawras network, which will generate
more broadband data across a much wider spectrum, will benefit
many of these new customers with a faster and higher-quality service.
Revenues and EBITDA
EBITDA, which stands for ‘earnings before interest, taxes, depreciation
and amortisation’, compares over time the profitability of a company’s
operations without the potentially distorting effects of changes in
depreciation, amortisation, interest and tax.
Lower revenue and an increase in international call volumes, which
led to higher operating expenses, caused EBITDA to decline during
2012 to OMR 94.9 million, against OMR 103.4 million in 2011, a fall
of 8.2 per cent.
Margin and operating expenditure
Nawras’ EBITDA margin (EBITDA as a percentage of sales) was 49.1
per cent, against 52.5 per cent in 2011, reflecting the increase in
international call volumes, which impacted gross margins. However,
we were able to increase our international customer base by
exploiting our international capacity.
As in previous years, the company’s focus on operational efficiency and
tight cost control, allied to high levels of staff productivity, slowed the
growth in total expenses. General, administrative and sales costs were
OMR 44.3 million, a drop of approximately OMR 0.2 million on 2011.
Capital expenditure
The first half of 2012 was occupied with the renegotiation of a major
vendor contract, to turbocharge the Nawras Radio Access Network
(RAN) by upgrading all sites to enhanced 3G+, enhancing penetration,
and increasing the entire network’s coverage, capacity and speed.
The contract was awarded at the end of June.
Selected Financial and Operating Data
For the year ended 31 December 2012
(OMR million, except where stated)
Revenues
EBITDA (note 1)
EBITDA Margin (%)
Net Profit
Net Debt (note 2)
Cash Flow Before Working Capital
Capital Expenditure (note 3)
ARPU (OMR)
Customers (thousands)
Prepaid
Postpaid
Other
Total
Mobile
Fixed
Total
Mobile Prepaid
Mobile Postpaid
Mobile Blended
Mobile Prepaid
Mobile Postpaid
Mobile Total
Fixed
Employees (number)
2007
2008
2009
2010
2011
2012
74
18
2
94
25.5
27.0
8
47.6
21.5
30
—
30
9.4
29.8
10.3
938
79
1,016
104
32
3
139
53.8
38.7
20
38.0
44.0
36
—
36
7.2
28.0
8.8
1,401
111
1,511
117
43
12
172
87.5
51.0
42
39.3
72.5
27
25
52
6.1
27.1
7.7
1,714
147
1,861
493
636
757
124
53
12
189
102.5
54.2
50
21.6
87.0
24
50
74
5.7
26.0
7.4
1,857
169
2,026
8
873
126
57
14
197
103
52.5
48
10.7
86
29
12
41
6.9
26.6
8.7
1,760
173
1,933
27
1,019
123
52
19
194
95
49.1
37
2.9
77
56
5
61
5.6
24.2
7.2
1,970
179
2,149
44
1,027
(1) EBITDA = Revenues minus operating expenses minus general and administrative expenses (excluding service fees). (2) Net debt = Gross debt minus cash and cash equivalents. (3) Including licensing fees.
32 | Nawras – Omani Qatari Telecommunications Company SAOG
However, the company has invested a total of OMR 331 million in
network and IT-related capital expenditure since operations started
in 2004, against a total of OMR 272 million by end 2011. Capex for the
mobile network amounted to OMR 56.6 million during the year, with a
further OMR 4.8 million invested in the fixed network. Nawras has also
paid OMR 64 million towards licence fees since its inception.
Profitability
Net profit, which was affected by lower EBITDA and higher
depreciation, declined 22.2 per cent to OMR 37 million, compared to
OMR 47.5 million the previous year. The fall in net profit was partially
offset by lower interest costs. Increased investment in network
modernisation contributed to the higher depreciation, while a
decrease in overall outstanding debt and the end of an above LIBOR
interest rate swap agreement resulted in lower interest costs.
Tight control of total expenses (excluding royalties) contained the
increase to 6 per cent, up from OMR 130.5 million to OMR 138.5 million.
Earnings per share of OMR 0.057 were down from the previous year’s
OMR 0.073, and the Board has recommended a dividend of OMR
0.038 per share for approval at the annual general meeting on 27
March 2013.
Net debt
A strong cash flow position supported the on-going reduction in
long-term debt, resulting in a 72.9 per cent improvement in the net
debt position, from OMR 10.7 million to OMR 2.9 million.
Balance sheet
The 3.2 per cent rise in total assets, to OMR 309 million from
OMR 299 million, was attributable mainly to growth in property,
plant and equipment.
Total equity of OMR 180 million increased by OMR 12 million (7.5 per
cent) over 2011, and net assets per share from OMR 0.257 to OMR
0.277. There was a decline in total liabilities from OMR 132 million to
OMR 129 million, largely due to a reduction of OMR 27.5 million in
interest-bearing borrowings. Total equity and liabilities increased to
OMR 309 million, from OMR 299 million, an increase of 3.2 per cent.
Prospects
Efforts to maximise productivity through operating efficiencies, and
continuing the preparations for the introduction of 4G LTE, a major
cornerstone of our plans to boost the Nawras network to achieve
higher levels of performance, remain firmly on track.
Our comprehensive network modernisation programme will provide
the platform for the increased coverage, and the range of new data
services, that will drive volumes and future revenue growth.
There will be an on-going focus on customer acquisition and
retention, particularly in the business sector, where there is massive
underlying demand. Nawras will use the results of the comprehensive
market research and analysis it conducted during 2012 to develop
the appropriate strategies to meet these objectives and to retain its
competitive advantage.
Cash flow
Net cash from operating activities totalled OMR 73.9 million, compared
to OMR 77.8 million in 2011. Cash and cash equivalents at the year-end
stood at OMR 25 million, down from OMR 44 million in 2011.
ä
49%
Capital Expenditure
OMR million
Mobile
Fixed
ä
30
07
74
08
2012 Revenues
Prepaid – OMR 123 million
Postpaid – OMR 52 million
Other – OMR 19 million
08
7.5%
11
92
07
12
208
180
143
31
309
291 299
158 174
07
63%
09 10
ä
Total Equity
OMR million
41
36
3.2%
Total Assets
OMR million
61
52
168
49
08
Cash Flow Before
Working Capital
OMR million
09
10
11
87.0 85.0
72.5
12
77.0
44.0
09
10%
10
11
12
21.5
07 08
09
10
11
12
27%
63%
Annual Report 2012 | 33
Corporate Governance Report
Nawras has always been committed to internationally recognised
corporate governance practices and ethical business conduct.
Nawras’ Board of Directors and Senior Management understand
that their implementation of good governance practices and
ethical business conduct results in sound business decisions. They
also have a positive impact on public perceptions of the Company
and benefit the wider economic and social development of Oman.
Nawras’ corporate governance practices meet Oman’s Capital Market
Authority (CMA) requirements. Nawras currently has relevant policies
and regulations that include:
• A corporate governance manual detailing the role and application
of corporate governance throughout the Company.
• Clear delegation of power, as set out in a comprehensive manual
of authority.
• Clear roles and responsibilities, as set out in the respective
charters for each Board committee: the Executive Committee,
the Audit Committee, and the Remuneration Committee – and
each management committee: the Management Committee,
the Promotion Committee, the Tender Committee, the Pricing
Committee, and the Sponsorship Committee.
• An organisation structure that identifies the responsibilities related
to the various executive positions within the Company and the
corresponding reporting structures and procedure, including the
extent of the authority of each position for approval of expenditure.
• Policies to govern expenditure, including policies and procedures
for accounting and procurement.
• Policies related to human resources including salaries, appointments,
development, training, promotions, and termination of services.
• A policy covering related-party transactions, together with
appropriate codes of ethics that apply to the Board and the Company.
• A clear approach to independence in the context of Directors
that is (and was already) in compliance with the recent changes
announced by the Capital Market Authority (CMA).
Board of Directors
The Board of Directors that managed Nawras throughout 2012 is
shown in table 1 (page 35).
There was one change to the composition of the Board during 2012
as Nawras’ former Vice Chairman, Mr Khalid Al-Mahmoud, resigned
following his promotion to a new role within Qtel Group: Group Chief
Officer – Small and Medium Businesses. Nawras is grateful for the
time given by Mr Khalid Al-Mahmoud as Vice Chairman and Director,
as well as during his time working for Nawras as Chief Operating
Officer between 2005 and 2010.
34 | Nawras – Omani Qatari Telecommunications Company SAOG
Mr Khalid Al-Mahmoud was replaced on the Board by Mr Mohamed
Jassim Al-Kuwari. He was appointed as a temporary Director in
accordance with the Company’s Articles of Association, and the
Company will seek permanent appointment at the Annual General
Meeting. Mr Khalid Al-Mahmoud was replaced as Vice Chairman
of the Board by Sheikh Saud Al-Thani.
Further information on current Board members
Sayyed Amjad Mohamed Al Busaidi
Chairman
Mr Al Busaidi has chaired the Nawras Board since March 2011. In
1990 he joined the Diwan of Royal Court and he currently serves as
Executive President of the Diwan of Royal Court Pension Fund. He was
appointed Chairman of Bank Nizwa in July 2012, and also serves on
the boards of NIFCO, National Mass Housing Company, and
Shomookh Investment. He has a Master’s degree in Business
Administration from Southern Cross University (Australia).
Sheikh Saud Nasser Faleh Al-Thani
Vice-Chairman
Sheikh Saud joined Qtel in 1990 and is currently Chief Executive
Officer of Qtel Qatar. He also serves as Executive Director of Group
HR and Acting Executive Director of General Services. He is also a
member of the Arab Organisation for Satellite Communication. Sheikh
Saud has a Bachelor of Arts in Public Administration from Western
International University (USA).
Mr Khalil Ibrahim Al Emadi
Director
Mr Al Emadi is currently the Chief Executive Officer of Navlink lnc
(one of Qtel’s partners). He has a strong background in
telecommunications with 27 years of experience in mobile services and
fixed telephony. Before joining Qtel, he worked at the Ministry of Transport
and Communications. He was the Executive Director of Wireline Services
until 2007 when, as part of an organisational restructuring, Qtel merged
the previous Wireless and Wireline groups into the Networks Division,
appointing Mr Al Emadi as Executive Director of Networks. He has a
Bachelor of Science in Electrical/Electronic Engineering from Northrop
University in California (USA).
Mr Ghassan Khamis Al Hashar
Director
Mr Al Hashar joined the Nawras Board as a representative of the
Public Authority for Social Insurance (PASI) in 2011. He is currently
the Authority’s Head of Asset Management – Local. He has more
than 15 years’ experience in finance and investment management
and represents PASI on the boards of numerous public and private
companies. Mr Al Hashar is currently Chairman of Bank Muscat’s Fund
Investors’ Committee and a Board member of Majan Development
Company. He holds a Master’s Degree in Finance and Investment
Management from the University of Aberdeen (UK).
Nawras’ Board of Directors and Senior
Management understand that their
implementation of good governance
practices and ethical business conduct
results in sound business decisions.
Table 1: The composition of the Board of Directors during 2012 was:
Membership of
Boards of other Joint
Stock Companies
Membership of other
Nawras Committees
Name
Date of appointment
Type of representation
Sayyed Amjad Mohamed Al Busaidi
(Chairman)
Sheikh Saud Nasser Faleh Al-Thani*
(Vice Chairman)
Mr Khalil Ibrahim Al Emadi
Mr Ghassan Khamis Al Hashar
Dr Shaikha Sultan Al Jabir
Mr Mohamed Jassim Al-Kuwari
26 March 2011
Non-executive, non-independent Nil
One
16 March 2008
Non-executive, non-independent Executive Committee
Nil
12 December 2010
26 March 2011
26 March 2011
29 July 2012
Non-executive, non-independent
Non-executive, independent
Non-executive, non-independent
Non-executive, non-independent
Nil
One
Nil
Nil
Mr Khalid Ibrahim Al-Mahmoud**
(Vice Chairman)
Mr Mohanna Nasser Al Nuaimi
Mr Said Faraj Al Rabeea
Mr Saleh Nasser Al-Riyami
Executive Committee
Audit Committee
Executive Committee
Executive Committee,
Remuneration Committee
26 March 2011
Non-executive, non-independent Executive Committee,
Remuneration Committee
26 March 2011
Non-executive, non-independent Remuneration Committee,
Audit Committee
27 July 2011
Non-executive, independent
Executive Committee
11 December 2004 Non-executive, independent
Audit Committee
Remuneration Committee
Nil
Nil
Nil
Two
* Sheikh Saud Nasser Faleh Al-Thani was appointed as the Vice Chairman at the Board Meeting on 29 July 2012.
** Mr Khalid Al-Mahmoud was Vice Chairman until his resignation on 19 June 2012.
Table 2: Board meetings and attendance in 2012
Sayyed Amjad Mohamed Al Busaidi
Mr Khalil Ibrahim Al Emadi
Dr Shaikha Sultan Al Jabir
Mr Saleh Nasser Al-Riyami
Mr Khalid Ibrahim Al-Mahmoud
Mr Ghassan Khamis Al Hashar
Mr Mohanna Nasser Al Nuaimi
Sheikh Saud Nasser Faleh Al-Thani
Mr Said Faraj Al Rabeea
Mr Mohamed Jassim Al-Kuwari
1
30.1.12
2
22.2.12
3
27.3.12
4
24.4.12
5
18.6.12
6
29.7.12
7
21.10.12
8
16.12.12
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
N/A
Yes
Yes
Yes
Yes
No
Yes
Yes
No
Yes
N/A
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N/A
No
Yes
No
Yes
Yes
Yes
No
Yes
No
N/A
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
Yes
Annual Report 2012 | 35
Corporate Governance Report Continued
Dr Shaikha Sultan Al Jabir
Director
Dr Al Jabir is currently Executive Director – New Businesses in Qtel
Group (QG). Before joining QG, she was CIO of Qatar General
Electricity and Water Corporation (Kahramaa), where she established
a sophisticated ICT infrastructure, helping to put the organisation at
the forefront of technology. She holds a PhD in Computer Science
from the University of Surrey (UK), an MS in Telecommunications and
Computers from George Washington University (USA), and a BS in
Electrical Engineering from Kuwait University.
Mr Mohamed Jassim Al-Kuwari
Director
Mr Al-Kuwari has been Qtel’s Chief Corporate Services Officer since
2011, having held several positions in the Group since 2005: Head
of Talent Sourcing, Senior Manager of Manpower Planning and Talent
Sourcing, and Assistant Director of Policy Development and HR
Services. He was also appointed Executive Director, Group HR in 2011.
Previously, Mr Al-Kuwari worked at Ras Laffan Liquefied Natural Gas.
He holds a Bachelor of Science in Business Administration from the
American University, Washington (USA).
Mr Mohanna Nasser Al Nuaimi
Director
Mr Al Nuaimi was appointed Group Chief Human Resources Officer
of Qtel Group in 2008, after serving as Qtel Qatar’s Executive Director
of Group Human Resources. He is a member of Qtel Group’s
Management Committee and a Board member of several other Qtel
Group companies. In 2009, Mr Al Nuaimi received the HR Leadership
Award on behalf of Qtel Group for the World HRD Congress, an
international honour for companies excelling in the field of people
management. He holds a Bachelor of Science in Mechanical
Engineering from Qatar University.
Mr Said Faraj Al Rabeea
Director
Mr Al Rabeea joined the Nawras Board in 2011. He has worked in the
government sector for more than 30 years, during which time he has
held a number of senior positions in human resources, information
technology, and telecommunications. He currently sits on a number
of a government boards in Oman. He has a Bachelor’s Degree in
Business Administration.
Mr Saleh Nasser Al-Riyami
Director
Mr Al-Riyami has been a member of the Nawras Board since the
Company’s launch. He has more than 20 years’ experience as the
Investment Expert for the Diwan of Royal Court and currently serves
as the General Manager of National Mass Housing SAOC. He has also
served as founder or director of many companies in Oman, as well
as in managerial positions in the Ministry of Commerce and Public
Authority of Social Security in Oman. Mr Al-Riyami is a Board member
of Taageer Finance Company and Al Madina Insurance Company.
He holds a Bachelor of Science in Business Administration from
the University of Georgia (USA).
36 | Nawras – Omani Qatari Telecommunications Company SAOG
Nawras has three Board committees: the
Executive Committee, the Audit Committee
and the Remuneration Committee.
Board meetings and Board members’ attendance in 2012
Attendances at Board meetings in 2012 are shown in table 2 (page 35).
Board committees
Nawras has three Board committees: the Executive Committee,
the Audit Committee and the Remuneration Committee.
Executive Committee
The Executive Committee focuses on strategic issues and has
responsibility for all budget and procurement related matters.
The Committee comprises five members.
The only change in the composition of the Executive Committee in
2012 was the resignation of Mr Khalid Al-Mahmoud (explained in the
preceding section on the Board of Directors) and the appointment
of Mr Mohamed Al-Kuwari as his replacement.
The Executive Committee met four times during 2012. The dates and
attendance at these meetings is shown in table 3 (page 37).
The Executive Committee’s terms of reference are:
• Approve expenditure within the limits specified by the Board
of Directors.
• Review and approve recommendations for the award of tenders.
Approve procurements and contracts of values within the limits
authorised under the Authority Manual or as delegated by the Board.
• Review the quality and efficiency of services and products provided
by the Company and suggest means of developing and upgrading
such services and products.
• Furnish Management with strategic directives on the priorities
and risks relating to financial and strategic investment operations.
• Approve financial and strategic investments and related matters
with a maximum limit of US$ 10,000,000 (US Dollars ten million)
for each investment operation, or US$ 100,000,000 (US Dollar
one hundred million) for all investment operations in each whole
calendar year.
• Approve investment operations and treasury affairs.
• Review the performance of the Committee and present periodic
updates on its activities to the Board of Directors.
• Review draft regulations and policies of the Company that fall within
the Committee’s scope of work, and submit recommendations on
the same to the Board of Directors.
• Review the Authority Manual and submit proposals for amendment
of the same to the Board of Directors.
• Submit reports to the Board of Directors including recommendations
on the scope, directives, quality, and level of investments undertaken
by the Company, if any.
The Executive Committee focuses on
strategic issues and has responsibility
for all budget and procurement
related matters.
Table 3: Executive Committee meetings and attendance in 2012
Mr Khalil Ibrahim Al Emadi
Mr Khalid Ibrahim Al Mahmoud
Dr Shaikha Sultan Al Jabir
Sheikh Saud Nasser Faleh Al-Thani
Mr Said Faraj Al Rabeea
Mr Mohamed Al Kuwari
1
26.03.12
2
18.4.12
3
5.6.12
4
15.8.12
Yes
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
No
Yes
N/A
Yes
Yes
Yes
Yes
Yes
N/A
Yes
N/A
Yes
Yes
Yes
Yes
Table 4: Audit Committee meetings and attendance in 2012
Mr Saleh Al-Riyami
Mr Mohanna Nasser Al Nuaimi
Mr Ghassan Khamis Al Hashar
1
29.1.12
2
22.2.12
3
26.3.12
4
24.4.12
5
28/29.7.12
6
17.10.12
7
19.12.12
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Table 5: Remuneration Committee meetings and attendance in 2012
RC.01
30.1.12
RC.02
22.2.12
RC.03
26.3.12
RC.04
24.4.12
RC.05
25.6.12
RC.06
28.7.12
RC.07
11.9.12
RC.08
21.10.12
RC.09
19.12.12
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
N/A
Yes
Yes
N/A
Yes
Yes
N/A
Yes
Yes
N/A
N/A
Yes
N/A
N/A
Yes
N/A
N/A
Yes
Yes
N/A
No
No
N/A
Yes
Yes
Mr Mohanna Al-Nuaimi
(Chairman)
Mr Khalid Al-Mahmoud
Mr Saleh Al-Riyami
Mr Mohamed Al Kuwari
Table 6: Total remuneration paid to Directors in respect of 2012
Position
Sayyed Amjad Mohamed Al Busaidi
Mr Khalid Ibrahim Al Mahmoud*
Sheikh Saud Nasser Faleh Al-Thani**
Mr Saleh Nasser Al-Riyami
Mr Khalil Ibrahim Al Emadi
Dr Shaikha Sultan Al Jabir
Mr Ghassan Khamis Al Hashar
Mr Mohanna Nasser Al Nuaimi
Mr Said Faraj Al Rabeea
Mr Mohamed Jassim Al Kuwari
* Mr Khalid Al-Mahmoud was Vice Chairman until his resignation on 19 June 2012.
** Sheikh Saud Nasser Faleh Al-Thani was appointed as the Vice Chairman at the Board Meeting on 29 July 2012.
Chairman
Vice Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Amount OMR
3,500
5,000
4,500
10,000
6,000
5,500
6,500
10,000
5,000
2,000
Annual Report 2012 | 37
Corporate Governance Report Continued
Audit Committee
The Audit Committee assists the Board to oversee the integrity of
the Company’s policies and financial statements, including validating
and recommending them for Board approval. It also oversees the
performance of the Company’s internal audit function. The
Committee comprises three directors.
The Audit Committee met seven times during 2012. The dates and
attendance at these meetings is shown in table 4 (page 37).
The Audit Committee’s terms of reference are:
• Establish the Internal Audit department’s objectives, policies
and scope.
• Review Internal Audit’s quarterly reports raised to the Committee, with
copies to the Chairman and the members of the Board of Directors.
• Review the External Auditors’ Report.
• Raise observations and recommendations regarding the points
included in such reports to the Board of Directors.
• Approve the Internal Audit department’s annual plans.
• Select the Company’s External Auditors and raise recommendations
on their appointment and fees.
• Select the Company’s Chief Internal Auditor, make recommendations
on his/her appointment and appraise his/her performance.
• Oversee administratively, financially and technically the Internal
Audit department including the proposal and implementation of its
operating and capital budget, its organisational structure, training,
development and promotion of staff, all in accordance with the
applicable regulations of the Company.
• Evaluate the Internal and External Audit performance.
• Review and study the Company’s regulations and policies,
whenever exigency dictates this, and raise suggestions on
their amendments to the Board of Directors.
Remuneration Committee
The Remuneration Committee focuses on the compensation and
benefits of employees and supervises the Company’s Omanisation and
succession programmes. The Committee comprises three directors.
The Remuneration Committee met 9 times during 2012. The dates
and attendance at these meetings is shown in table 5 (page 37).
The Remuneration Committee’s terms of reference are:
• Recommend the appointment and termination of the CEO and all
Grade 1 executive managers.
• Approve the appointment and termination of all Grade 2 managers. • Recommend the annual performance rating of the CEO.
• Approve the annual performance rating of all Grade 1
executive managers.
• Approve the Nawras corporate score.
38 | Nawras – Omani Qatari Telecommunications Company SAOG
The Audit Committee assists the Board
to oversee the integrity of the Company’s
policies and financial statements, including
validating and recommending them for
Board approval.
• Oversee the Remuneration policies of the Company, including
variable compensation systems and incentive programmes.
Approve any changes to such systems and programmes.
• Periodically review the Company’s HR and Training Policies, the
Job Evaluation Policy, and the employee performance evaluation.
• Approve any exceptions to HR policies, including for compensation
and benefits that are outside the authority of management.
Total remuneration paid to Directors in respect of 2012
Nawras Directors are each paid a sitting fee of OMR 500 per Board
or Committee meeting. Table 6 (page 37) details the total sitting fee
amounts paid to the Directors during 2012.
Additionally, at the Company’s Annual General Meeting held on 27
March 2012, the shareholders approved a further distribution to the
Directors of OMR 138,750, to be divided between the Directors.
Related-party transactions 2012
Related-party transactions entered into by the Company during 2012
are shown in table 7 (page 39).
The majority of the increase is attributable to Long Term Incentives
(LTI) obligations for senior management (2011 amount 0). The
balance of the increase is attributable to the addition of new senior
management in Q4 2011. The service fee payable to Qtel International
as per the Technical Services Agreement comprised 3 per cent of
gross revenues for 2012.
Senior management
Nawras’ senior management team during 2012 is shown in
table 8 (page 39).
Table 9 (page 39) is an outline of the current organisational structure:
Ross Cormack
Chief Executive Officer
Ross has been CEO of Nawras since 2004 and has more than 25
years of experience in the telecommunications industry, having
led four different telecommunications companies, served on the
Board of Directors of six companies, and shareholder-managed
16 companies across Europe, the Middle East and Asia. His recent
experience has included serving as Executive Director Wireless for
Qtel, CEO and founder of Singapore-based Virgin Mobile Asia and
Managing Director of Hong Kong CSL. Ross holds a Double Honours
Bachelor of Science and Bachelor of Communications in Engineering
Production and Economics from the University of Birmingham (UK).
Ross is also serving as Acting Chief People Officer until an
appointment is made.
The Remuneration Committee focuses
on the compensation and benefits of
employees and supervises the Company’s
Omanisation and succession programmes.
Table 7: Related-party transactions during 2012
OMR
2012
OMR
2011
% Change
1,976,935
1,726,624
200,000
50,311
1,417,753
1,177,105
200,000
40,648
39%
47%
0%
24%
5,821,486
1,003,716
5,889,412
1,297,338
-1%
-23%
54,258
54,583
-1%
264,611
323,426
-18%
-
149,607
-100%
684,847
769,722
-11%
Transaction
Directors and Key Management remuneration comprising:
Salaries/remuneration and benefits
Directors’ remuneration
Employees’ end of service benefits
The majority of the increase is attributable to Long Term Incentives (LTI) obligations for
senior management (2011 amount 0). The balance of the increase is attributable to the
addition of new senior management in Q4 2011.
Service fee payable to Qtel International as per Technical Services Agreement
comprising 3% of gross revenues for 2012
Other expenses, comprising:
• Reimbursement of salaries of seconded staff and other cost reimbursements
(Qatar Telecommunication)
• Reimbursement of salaries and other expenses of seconded staff
(Qtel Group)
• Site rental expenses
(ISS Pension Fund)
• Site maintenance expenses
(Elite Technology LLC)
Table 8: Senior management
Ross Cormack
Jorgen Latte
Abdulla Al-Rawahy
Wolfgang Wemhoff
Said Safrar
Martin Lyne
James Maxwell
Hussain Al-Lawati
Sean Casey
Kumail Al-Moosawi
Chief Executive Officer
Chief Financial Officer
Chief Strategy Officer
Chief Technical Officer
Chief Customer Experience Officer
Chief Marketing Officer
General Counsel
Chief Government Relations Officer
Chief Sales and Distribution Officer
Director of People
Table 9: Nawras organisational structure
Chief Executive Officer
(CEO)
Chief Financial
Officer
(CFO)
Chief People
Officer
(CPO)
Chief Technical
Officer
(CTO)
Chief Marketing
Officer
(CMO)
Chief Sales &
Distribution
Officer
(CSDO)
Chief Customer
Experience
Officer
(CCXO)
General
Counsel
(GC)
Chief Strategy
Officer
(CSO)
Chief
Government
Relations Officer
Finance
People
Technology
Marketing
Sales &
Distribution
Customer
Experience
GC
Strategy
Government
Relations
Annual Report 2012 | 39
Corporate Governance Report Continued
Jorgen Latte
Chief Financial Officer
Jorgen has been Chief Financial Officer of Nawras since 2009.
Jorgen has almost 20 years of financial and managerial experience
in the telecommunications sector, with 10 years in stand-alone CFO
roles for mobile services companies and additional prior experience
at TeliaSonera and Tele2. Jorgen holds a Bachelor of Arts in Finance
and Accounting from Stockholm University (Sweden).
Abdulla Issa Al-Rawahy
Chief Strategy Officer
Abdulla has been Chief Strategy Officer of Nawras since 2008 and
has over 30 years of experience in the telecommunications sector,
with leading roles in network planning and projects, and strategy
and corporate business development for both fixed and mobile
telecommunications. Prior to joining Nawras, Abdulla served as
Technical Advisor to the Minister of Transport and Communications,
President of Omantel, and Chairman and founding Member of the
Oman Fibre Optic Company. Abdulla holds a Bachelor of Engineering
Technology and Master of Science in Electrical Engineering from the
University of Central Florida (USA).
Wolfgang Wemhoff
Chief Technology Officer
Wolfgang joined Nawras in 2011 and has more than 20 years
of experience in the telecommunications industry, working for
Mannesmann and Vodafone. He had leading roles in Vodafone
Germany, in Vodafone Group, and recently in Vodafone Turkey.
Wolfgang holds a Bachelor of Engineering Technology from
University Munster (Germany) and a Bachelor of Business
Administration from University Dortmund (Germany).
Said Safrar
Chief Customer Experience Officer
Said has worked for Nawras since 2008, originally as the Customer
Service Director. He was appointed to his new role as Chief Customer
Experience Officer in September 2011, as part of the Company’s focus
on customer experience. Prior to joining Nawras Said worked in the
banking industry and has more than 15 years’ working experience
with Oman International Bank and Bank Dhofar. Said holds a Masters
in Business Administration from the University of Hull (UK).
Martin Lyne
Chief Marketing Officer
Martin joined Nawras in 2012, bringing over 20 years of commercial
experience. He was previously Consumer Commercial Director
of Orange UK, which achieved the fastest growth of any operator
launching fourth to market. Most recently he was Managing Director
for Small and Medium Enterprises with Everything Everywhere (the
joint venture between Orange and T Mobile). Martin is a member
of the Institute of Chartered Accountants of England and Wales. He
holds a BA (Hons) in Economics and Business Studies from Leeds
University (UK).
40 | Nawras – Omani Qatari Telecommunications Company SAOG
The Nawras website has a comprehensive
Investor Relations section where
shareholders can view the Company’s
quarterly financial information, disclosure
policy, and frequently asked questions.
James Maxwell
General Counsel
James joined Nawras in 2007 and has over 15 years’ experience in
providing legal and regulatory advice to leading corporates, with 10
years working exclusively in telecommunications. His past roles include
working in M&A and securities at Linklaters in the UK and Minter Ellison
in Australia, and as an in-house Corporate Counsel at Vodafone UK
and more recently SingTel Optus in Australia. James holds a Bachelor
of Laws (LLB Hons) from Melbourne University (Australia).
Hussain Al-Lawati
Chief Government Relations Officer
Hussain joined Nawras in 2004 as a Section Head – Key Account
Manager – Business Sales Head. Prior to Nawras he served as a
Product Manager in Oman National Dairy Products, as Commercial
Sales Executive and Fuel Card Section Head in British Petroleum
Oman, and as Sales & Marketing Manager in Mehdi Foods. Hussain
holds a Bachelor’s degree in Business Administration from Camden
University (USA).
Sean Casey
Chief of Sales and Distribution
Sean joined Nawras in 2012. He has over 15 years’ sales and managerial
experience in the telecommunications sector in Australia, Saudi Arabia
and now Oman. Sean has managed and led multiple national sales
functions in both the consumer and business segments, and has
experience with Telstra, Vodafone, VHA, Sale-Co and STC.
Kumail Al-Moosawi
Director of People
Kumail has been with Nawras since 2004 and brings over 13 years’
experience in numerous business functions that include retail,
operations, finance, customer service, audit, and human resources
management. Kumail completed his undergraduate education at
Florida Atlantic University in the United States, majoring in Finance. He
is also a continuing member of the Chartered Institute of Personnel
and Development (CIPD) and an active member of the GCC HR Forum.
Channels and methods of communication with shareholders
and investors
The Nawras website has a comprehensive Investor Relations section
where shareholders can view the Company’s quarterly financial
information, disclosure policy, and frequently asked questions. They
can also register to receive financial news alerts and contact the
Investor Relations Manager by email.
Quarterly conference sessions with analysts are planned throughout
the year, and quarterly financial statements are published in national
newspapers within five days of being presented on the Muscat
Securities Market website.
The ‘Management Review’ section of the Nawras annual report
contains detailed management discussion and analysis.
Qtel is the only shareholder that holds
more than 10 per cent of Nawras’ issued
shares. The Company does not have any
securities or financial instruments
convertible to shares.
Table 10: Nawras share trading throughout 2012
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Volume
Turnover
5,152,607
9,346,404
11,054,056
4,608,831
4,614,885
4,298,192
1,941,251
3,201,420
12,274,859
9,558,267
3,675,919
8,081,400
77,808,091
3,304,698
5,826,197
6,915,339
2,719,970
2,377,513
2,196,191
955,419
1,497,071
5,909,948
4,856,120
1,783,059
3,793,603
42,135,131
Trades High price
863
1,598
1,024
875
765
335
387
333
1,138
1,026
498
881
9,723
0.655
0.639
0.636
0.606
0.550
0.523
0.510
0.475
0.517
0.552
0.495
0.484
Low price
Closing
price
Previous Difference Difference
close
%
(OMR)
0.627
0.610
0.595
0.549
0.491
0.501
0.469
0.461
0.429
0.483
0.469
0.456
0.632
0.629
0.599
0.551
0.518
0.509
0.470
0.469
0.501
0.488
0.470
0.461
0.650
0.632
0.629
0.599
0.551
0.518
0.509
0.470
0.469
0.501
0.488
0.470
-2.8
-0.5
-4.8
-8.0
-6.0
-1.7
-7.7
-0.2
6.8
-2.6
-3.7
-1.9
-0.018
-0.003
-0.030
-0.048
-0.033
-0.009
-0.039
-0.001
0.032
-0.013
-0.018
-0.009
Last price
Security Cap
(OMR)
0.627
411,396,753
0.630 409,443,921
0.596 389,915,594
0.549 358,670,271
0.525
337,189,111
0.508 331,330,613
0.470 305,943,788
0.470 305,292,844
0.505 326,123,059
0.486 317,660,784
0.470 305,943,788
0.457 300,085,290
Table 11: Nawras share price compared to MSM30 index throughout 2012
6,300
Nawras
MSM 30
6,100
0.700
0.600
5,900
0.500
5,700
0.400
5,500
0.300
5,300
0.200
MSM30
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Share
Price
Table 12: Nawras Share Distribution (in terms of ownership)
Month
January
February
March
April
May
June
July
August
September
October
November
December
Omani
Non Omani
GCC (Non Omani)
Arab (Non Omani)
Foreigner
35.3%
35.6%
35.6%
35.6%
35.7%
35.7%
35.8%
35.7%
35.4%
35.4%
35.4%
35.2%
64.7%
64.4%
64.4%
64.4%
64.3%
64.3%
64.2%
64.3%
64.6%
64.6%
64.6%
64.8%
61.8%
61.9%
62.2%
62.1%
62.1%
62.4%
62.3%
62.4%
62.7%
62.7%
62.7%
63.0%
0.1%
0.1%
0.1%
0.1%
0.1%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
2.9%
2.4%
2.1%
2.2%
2.1%
1.8%
1.8%
1.7%
1.8%
1.8%
1.8%
1.7%
Annual Report 2012 | 41
Corporate Governance Report Continued
Nawras share trading details
Nawras shares traded on the Muscat Securities Market during 2012
as shown in table 10 (page 41). Nawras’ share price compared to the
MSM30 index throughout 2012 is shown in table 11 (page 41). Nawras’
share distribution in 2012 is shown in table 12 (page 41).
Qtel is the only shareholder that holds more than 10 per cent of
Nawras’ issued shares. The Company does not have any securities
or financial instruments convertible to shares.
Details of non-compliance by the Company
Nawras, as a regulated telecommunications operator, is subject to
oversight by the Telecommunications Regulatory Authority (TRA).
From time to time, Nawras has been subject to regulatory action
by the TRA related to compliance with the terms of its licences and
the Telecommunications Regulatory Act. Nawras has an excellent
relationship with the TRA and has worked with it to remedy any
concerns raised.
Below is a summary of the material regulatory decisions that relate
to Nawras made by the TRA during 2012:
• Frequency penalties – in 2012 the Company worked with the TRA
to perform a reconciliation of certain Nawras information against
the corresponding information held by the TRA. One outcome of
the process was that it was determined that Nawras was in breach
of certain obligations relating to the frequencies utilised by Nawras.
The TRA penalised Nawras in an amount of OMR 10,782.56 in
respect of the breaches. The penalty was paid during 2012.
• WiMAX violation – the TRA issued Nawras with a violation notice
for making WiMAX modem installation service mandatory. This
was against the TRA’s approval for the service, in which it requested
Nawras to make the installation service optional. No fine was issued
and the matter was closed with Nawras changing its process.
• WiMAX violation – in November 2012, the TRA issued Nawras
with a violation notice for differentiating outdoor and indoor
WiMAX modem prices. The TRA’s approval was subject to nondifferentiation in modem prices regardless of coverage strength.
Nawras was requested to propose remedies for this violation. A
penalty has not yet been determined and the issue is on-going.
Apart from the above regulatory non-compliance, Nawras has no
material legal or regulatory non-compliance to disclose.
42 | Nawras – Omani Qatari Telecommunications Company SAOG
Nawras has established an organisation
that ensures risk management is an
essential part of the Company’s culture
and strategic decision-making through
an Enterprise Risk Management
(ERM) function.
Disclosure policy
Nawras rigorously applies its disclosure policy so as to develop and
maintain reasonable market expectations of the Company’s current
and future trading prospects. This is achieved by making disclosure
on a widely disseminated basis, through a realistic understanding of
prospects for future performance, and by ensuring that information
does not intentionally or unintentionally mislead investors.
Managing risk
Nawras has established an organisation that ensures risk
management is an essential part of the Company’s culture and
strategic decision-making through an Enterprise Risk Management
(ERM) function. The ERM’s strategic objectives bring a systematic
approach to assessing, evaluating, managing and controlling the
overall enterprise risk. It also assists in providing practical and
cost-effective solutions to manage and mitigate risk.
Enterprise Risk Management is called for under the Nawras
corporate governance framework. The Company is required to
present the status of internal control and arrangements for risk
management to its senior management and report the same
to the Board of Directors on a quarterly basis.
External auditor
The Company’s external auditors in respect of 2012 were Deloitte
& Touche. The total fees for audit and related services paid to the
auditors in respect of 2012 were OMR 49,576.
Board declaration
The Board of Directors acknowledges that:
• Nawras has all its systems and procedures formally documented
and in place. The Company’s internal regulations comply with
relevant regulatory requirements and have been formalised,
reviewed and approved by the Board of Directors.
• The Board of Directors is responsible for ensuring that the financial
statements are prepared in accordance with International Financial
Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB), interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC), the
requirements of the Commercial Companies Law of the Sultanate
of Oman 1974 (as amended), and the rules for disclosure
requirements prescribed by the Capital Market Authority.
• No material events affect the continuation of Nawras and its
operations during the next financial year.
Deloitte & Touche (M.E.) & Co. LLC
Muscat International Centre
Location: MBD Area
P.O. Box 258, Ruwi, Postal Code 112
Sultanate of Oman
Tel: +968 2481 7775, Fax: +968 2481 5581
www.deloitte.com
TO THE SHAREHOLDERS OF OMANI QATARI TELECOMMUNICATIONS COMPANY SAOG (NAWRAS)
We have performed the procedures prescribed in Capital Market Authority (CMA) Circular No. 16/2003 dated 29 December 2003 with respect
to the accompanying corporate governance report of Omani Qatari Telecommunications Company SAOG (NAWRAS) and its application of
corporate governance practices in accordance with CMA Code of Corporate Governance issued under circular No. 11/2002 dated 3 June 2002
as supplemented by the Rules and Guidelines on Disclosure by Issuers of Securities and Insider Trading approved by Administrative Decisions no.
5/2007 dated 27 June 2007 and the Executive Regulation of the Capital Market Law issued under the Decision No. 1/2009 dated 18 March 2009
(collectively the Code and additional regulations and disclosures). Our engagement was undertaken in accordance with the International Standards
on Related Services applicable to agreed-upon procedures engagements. The procedures were performed solely to assist you in evaluating the
Company’s compliance with the code as issued by the CMA.
We report our findings as below:
We found that the Company’s corporate governance report fairly reflects the Company’s application of the provisions of the Code and is free
from any material misrepresentation.
Because the above procedures do not constitute either an audit or a review made in accordance with International Standards on Auditing
or International Standards on Review Engagements, we do not express any assurance on the corporate governance report.
Had we performed additional procedures or had we performed an audit or review of the corporate governance report in accordance with
International Standards on Auditing or International Standards on Review Engagements, other matters might have come to our attention that
would have been reported to you.
Our report is solely for the purpose set forth in the first paragraph of this report and for your information and is not to be used for any other
purpose. This report relates only to the accompanying corporate governance report of Omani Qatari Telecommunications Company SAOG
(NAWRAS) to be included in its annual report for the year ended 31 December 2012 and does not extend to any financial statements of Omani
Qatari Telecommunications Company SAOG (NAWRAS), taken as a whole.
Deloitte & Touche (M.E.) & Co. LLC
Muscat, Sultanate of Oman
20 February 2013
Mark Dunn
Partner
Annual Report 2012 | 43
Deloitte & Touche (M.E.) & Co. LLC
Muscat International Centre
Location: MBD Area
P.O. Box 258, Ruwi, Postal Code 112
Sultanate of Oman
Tel: +968 2481 7775, Fax: +968 2481 5581
www.deloitte.com
Independent auditor’s report to the shareholders of Omani Qatari Telecommunications Company SAOG
Report on the financial statements
We have audited the accompanying financial statements of Omani Qatari Telecommunications Company SAOG (the “Company”) which comprise
the statement of financial position as of 31 December 2012, and the statements of income, comprehensive income, changes in equity and cash
flows for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 51 to 74.
Board of Directors’ responsibility for the financial statements
The Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International
Financial Reporting Standards, the relevant disclosure requirements of the Commercial Companies Law of 1974, as amended, of the Sultanate
of Oman and the Rules and Guidelines on disclosure issued by the Capital Market Authority, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2012,
and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the financial statements comply, in all material respects, with the relevant disclosure requirements of the Commercial Companies
Law of 1974, as amended and the Rules and Guidelines on disclosure issued by the Capital Market Authority.
Deloitte & Touche (M.E.) & Co. LLC
Muscat, Sultanate of Oman
20 February 2013
Mark Dunn
Partner
44 | Nawras – Omani Qatari Telecommunications Company SAOG
Financial
Statements
46 47 48 49 50 51
Statement of Income
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Annual Report 2012 | 45
Statement of Income | Year ended 31 December 2012
Notes
Revenue
Other income
4
Operating expenses
General and administrative expenses
Depreciation and amortisation
Royalty
Financing costs (net)
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE YEAR
Basic and diluted earnings per share (OMR)
5
6
The attached notes 1 to 29 form part of these financial statements
46 | Nawras – Omani Qatari Telecommunications Company SAOG
7
8
9
2012
OMR ‘000
2011
OMR ‘000
193,500
365
193,865
(60,134)
(44,256)
(32,769)
(13,216)
(1,351)
42,139
(5,163)
36,976
0.057
196,865
337
197,202
(54,846)
(44,461)
(28,040)
(12,665)
(3,201)
53,989
(6,477)
47,512
0.073
Statement of Comprehensive Income | Year ended 31 December 2012
Profit for the year
Other comprehensive income
Net unrealised gain on cash flow hedges
Income tax effect
Other comprehensive income for the year
Total comprehensive income for the year
2012
OMR ‘000
2011
OMR ‘000
36,976
47,512
329
(39)
290
37,266
1,631
(196)
1,435
48,947
The attached notes 1 to 29 form part of these financial statements
Annual Report 2012 | 47
Statement of Financial Position | At 31 December 2012
Notes
2012
OMR ‘000
2011
OMR ‘000
ASSETS
Non current assets
Property, plant and equipment
10
214,136
182,138
Licence fee
11
39,075
42,425
Positive fair value of derivatives
16
12
Total non current assets
253,223
224,563
Current assets
Inventories
1,025
670
Receivables and prepayments
12
30,055
29,702
Bank balances and cash
13
24,738
44,462
Total current assets
55,818
74,834
TOTAL ASSETS
309,041
299,397
EQUITY AND LIABILITIES
Capital and reserves
Share capital
14
65,094
65,094
Statutory reserve
15
20,378
16,680
Cumulative changes in fair values
16
(7)
(297)
Retained earnings
94,584
86,042
Total equity
180,049
167,519
Non current liabilities
Interest bearing borrowings
17
20,939
21,940
Site restoration provision
18
2,256
3,643
Employee benefits
19
926
783
Deferred tax liability
8
1,224
616
Total non current liabilities
25,345
26,982
Current liabilities
Payables and accruals
20
79,478
54,877
Interest bearing borrowings
17
6,701
33,215
Employee benefits
19
72
1,355
Negative fair value of derivatives
16
20
337
Deferred revenue
12,575
8,729
Income tax payable
8
4,801
6,383
Total current liabilities
103,647
104,896
Total liabilities
128,992
131,878
TOTAL EQUITY AND LIABILITIES
309,041
299,397
Net assets per share
9
0.277
0.257
These financial statements were approved and authorised for issue by the Board of Directors on 20 February 2013 and were signed on their behalf by:
Sayyed Amjad Mohamed Al Busaidi
Chairman
The attached notes 1 to 29 form part of these financial statements
48 | Nawras – Omani Qatari Telecommunications Company SAOG
Saleh Nasser Al-Riyami
Board Member and Chairman
of the Audit Committee
Ross Cormack
Chief Executive Officer
Statement of Changes In Equity | At 31 December 2012
At 1 January 2011
Profit for the year
Other comprehensive income for the year
Transfer to legal reserve (note 15)
Dividends (note 14)
At 1 January 2012
Profit for the year
Other comprehensive income for the year
Transfer to legal reserve (note 15)
Dividends (note 14)
At 31 December 2012
Share
capital
OMR ‘000
Statutory
reserve
OMR ‘000
Cumulative changes
in fair values
OMR ‘000
Retained
earnings
OMR ‘000
Total
OMR ‘000
65,094
65,094
65,094
11,929
4,751
16,680
3,698
20,378
(1,732)
1,435
(297)
290
(7)
68,017
47,512
(4,751)
(24,736)
86,042
36,976
(3,698)
(24,736)
94,584
143,308
47,512
1,435
(24,736)
167,519
36,976
290
(24,736)
180,049
The attached notes 1 to 29 form part of these financial statements
Annual Report 2012 | 49
Statement of Cash Flows | Year ended 31 December 2012
Notes
OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Depreciation
Amortisation
Interest income
Accrual for employees’ end of service benefits
Financing costs
Loss / (profit) on disposal of property, plant and equipment
Unwinding of discount of site restoration provision
Operating profit before working capital changes
Working capital changes:
Inventories
Receivables and prepayments
Payables, accruals and deferred revenue
Cash from the operations
Payment of IPO incentive – shadow shares
Interest paid
Income tax paid
Employees’ end of service benefits paid
Net cash from operating activities
INVESTING ACTIVITIES
Purchase of property, plant and equipment
Payment of licence fee
Interest income
Proceeds on disposal of property, plant and equipment
Net cash used in investing activities
FINANCING ACTIVITIES
Repayment of term loan
Long term loan draw down
Dividends paid
Net cash used in financing activities
DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
10
11
18
19
10
11
14
2012
OMR ‘000
2011
OMR ‘000
42,139
53,989
29,069
3,700
(326)
315
1,577
388
100
76,962
24,346
3,694
(77)
297
3,074
(8)
204
85,519
(355)
(353)
6,878
83,132
(1,283)
(1,577)
(6,176)
(172)
73,924
(288)
(54)
2,534
87,711
(277)
(3,074)
(6,450)
(128)
77,782
(41,373)
(350)
326
(41,397)
(42,232)
77
8
(42,147)
(84,029)
56,514
(24,736)
(52,251)
(19,724)
44,462
24,738
(15,780)
(24,736)
(40,516)
(4,881)
49,343
44,462
Note: The amounts under purchase of property, plant and equipment represent the net additions for capital expenditure adjusted for timing differences.
The attached notes 1 to 29 form part of these financial statements
50 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
1 LEGAL STATUS AND PRINCIPAL ACTIVITIES
Omani Qatari Telecommunications Company SAOG (the “Company”) is an Omani joint stock company registered under the Commercial Companies
Law of the Sultanate of Oman. In accordance with Royal Decree 17/2005, effective 19 February 2005, the Company was granted a licence to provide
mobile telecommunication services in the Sultanate of Oman for a period of 15 years ending 18 February 2020.
In accordance with Royal Decree 34/2009, effective 6 June 2009, the Company was also awarded a licence to provide fixed line telecommunication
services in the Sultanate of Oman for a period of 25 years. The Company’s activities under this licence will be installation, operation, maintenance
and exploitation of fixed public telecommunications systems in the Sultanate of Oman.
The Company’s current principal activities are the operation, maintenance and development of mobile and fixed telecommunications services
in the Sultanate of Oman.
The Company is a subsidiary of Qatar Telecom (Qtel) Q.S.C whose registered address is PO Box 217, Doha, Qatar.
In accordance with the requirements of the Company’s mobile licence, the Company proceeded with an initial public offering (IPO). The promoting
shareholders at the Company’s Extraordinary General Meeting held on 7 March 2010 approved the conversion of the Company from a Closed Joint
Stock Company (SAOC) to a Public Joint Stock Company (SAOG) by offering their 260,377,690 shares for the public subscription. The Company
closed its IPO on 21 October 2010 and its shares were listed on the Muscat Securities Market on 1 November 2010. The IPO proceeds and share
issue expenses were recorded by the promoting shareholders.
BASIS OF PREPARATION
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS). These financial
statements also comply with the applicable requirements of the Commercial Companies Law of the Sultanate of Oman and the rules and guidelines
on disclosure issued by the Capital Market Authority.
The accounting records are maintained in Omani Rial, which is the functional and reporting currency for these financial statements. The financial
statements’ numbers are rounded to the nearest thousand except when otherwise indicated.
The financial statements are prepared under the historical cost convention modified to include the measurement at fair value of certain
financial instruments.
2 ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
For the year ended 31 December 2012, the Company has adopted all the new and revised standards and interpretations issued by the International
Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its
operations and effective for the year beginning on 1 January 2012.
2.1 STANDARDS AND INTERPRETATIONS ADOPTED WITH NO EFFECT ON THE FINANCIAL STATEMENTS
The following new and revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has not had any
significant impact on the amounts reported in these financial statements, but may affect the accounting for future transactions or arrangements.
Amendments to IFRS 7 –
Disclosures – Transfer of
Financial Assets
The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial
assets. These amendments are intended to provide greater transparency around risk exposures of transactions
where a financial asset is transferred but the transferor retains some level of continuing exposure in the asset.
Amendments to IAS 12 –
Deferred Tax: Recovery
of Underlying Assets
The amendments to IAS 12 provide an exception to the general principle set out in IAS 12 Income Taxes that the
measurement of deferred tax should reflect the manner in which an entity expects to recover a carrying amount
of the asset. Specifically, the amendments established a rebuttable presumption that the carrying amount of
an investment property measured using the fair value model in IAS 40 Investment Property will be recovered
entirely through sale.
Annual Report 2012 |
51
Notes to the Financial Statements | Year ended 31 December 2012
2 ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (Continued)
2.2NEW AND REVISED IFRS IN ISSUE BUT NOT YET EFFECTIVE
At the date of authorisation of these financial statements, the following new and revised Standards and Interpretations were in issue but not
yet effective:
New IFRS and relevant amendments
Effective for annual periods
beginning on or after
Financial Instruments
IFRS 9: Financial Instruments (as revised in 2010 to include requirements for the classification and
measurement of financial liabilities and incorporate existing derecognition requirements)
Amendments to IFRS 9 and IFRS 7: Mandatory Effective Date of IFRS 9 and Transition Disclosures
January 2015
January 2015
Consolidation, joint arrangements, associates and disclosures
IFRS 10: Consolidated Financial Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of Interests in Other Entities
Amendments to IFRS 10, IFRS 11 and IFRS 12 Consolidated Financial Statements, Joint Arrangements and
Disclosures in Other Entities: Transition Guidance and investment entities
IAS 27: Separate Financial Statements (as revised in 2011)
IAS 27: Separate Financial Statements amendments for investments entities
IAS 28: Investments in Associates, reissued as IAS 28 Investments in Associates and Joint Ventures
(as revised in 2011)
January 2013
January 2013
January 2013
January 2013
January 2013
January 2014
January 2013
Fair value measurement
IFRS 13: Fair Value Measurement
January 2013
Revised IFRS
Employee benefits
IAS 19: Employee Benefits (as revised in 2011 for the post - employment benefits and termination benefits)
January 2013
Amendments to IFRSs
IAS 1: Presentation of items of other comprehensive income
IAS 32: Offsetting Financial Assets and Financial Liabilities
Annual improvements to IFRSs 2009 to 2011 Cycles
IFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities
July 2012
January 2014
January 2013
January 2013
New Interpretations and amendments to Interpretations:
IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine
1 January 2013
The directors anticipate that the adoption of the above standards and interpretations in future periods will have no material impact on the financial
statements of the Company in the period of initial application.
52 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies are as follows:
Revenue and deferred income
Revenue from rendering of services:
Revenue from rendering of services represents the value of telecommunication services provided to customers. Revenue is recognised over the
period to which it relates.
Interconnection revenue:
Revenues from network interconnection with other domestic and international telecommunications operators are recognised based on the
actual traffic.
Operating revenues for local and international interconnections are based on tariffs as stipulated by the Telecommunication Regulatory Authority
of the Sultanate of Oman or as agreed between the operators. Interconnection revenue and cost are reported on a gross basis in the statement
of comprehensive income.
Sales of prepaid cards:
Sales of prepaid cards is recognised as revenue based on the estimated utilisation of the prepaid cards sold. Sales relating to unutilised prepaid
cards are accounted as deferred income. Deferred income related to unused prepaid cards is recognised as revenue when utilised by the customer
or upon termination of the customer relationship. Revenue is recognised net of any upfront discount given.
Sales of equipment:
Revenue from sales of equipment is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
amount of revenue can be measured reliably.
Reseller revenue:
Revenue from resellers is recognised based on the traffic usage.
Interest revenue:
Interest revenue is recognised as the interest accrues using the effective interest method, under which the rate used exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed as incurred.
Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds.
Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. Taxation is provided in accordance with Omani regulations.
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realised or the liability is settled, based on laws that have been enacted at the reporting date.
Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses,
if any, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward
of unused tax assets and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Annual Report 2012 | 53
Notes to the Financial Statements | Year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxation (Continued)
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or
directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Directors’ remuneration
The Company follows the Commercial Companies Law 1974 (as amended), and other latest relevant directives issued by Capital Market Authority,
in regard to determination of the amount to be paid as Directors’ remuneration. Directors’ remuneration is charged to profit or loss in the year to
which they relate.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements only in the period in which
the dividends are approved by the Company’s shareholders.
Foreign currency transactions
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting date. All differences are recognised in profit or loss.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is charged to profit or loss
on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Capital work-in-progress is not
depreciated. The estimated useful lives are as follows:
Mobile/fixed exchange and network equipment
Subscriber apparatus and other equipment
Building
5 – 15 years
2 – 10 years
10 years
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying
value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are
written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.
Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the
carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic
benefits of the related item of property, plant and equipment. All other expenditure is recognised in profit or loss as the expense is incurred.
When each major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement
if the recognition criteria are satisfied.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognising of the asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is recognised in profit or loss in the period the asset is derecognised.
The assets’ residual values, useful lives and methods are reviewed, and adjusted prospectively, if appropriate, at each financial year end.
54 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised
development costs, are not capitalised and expenditure is reflected in the statement of income in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed
at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with
the function of the intangible asset.
A summary of the useful lives and amortisation methods of the Company’s intangible assets are as follows:
Useful lives
Amortisation method used
Internally generated or acquired
Mobile licence costs
Fixed licence costs
Finite (15 years)
Amortised on a straight line basis
over the periods of availability.
Acquired
Finite (25 years)
Amortised on a straight line basis
over the periods of availability.
Acquired
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses. The cost of inventory is based on the weighted average principle and
includes expenditure incurred in acquiring inventories and bringing them to their existing location and condition. Provision is made for obsolete,
slow-moving and defective inventories, where appropriate.
Employees’ benefits
End of service benefits
End of service benefits are accrued in accordance with the terms of employment of the Company for employees at the reporting date, having
regard to the requirements of the Oman Labour Law. Employee entitlements to annual leave are recognised when they accrue to employees and
an accrual is made for the estimated liability for annual leave as a result of services up to the reporting date.
Defined contribution plan
Contributions to a defined contribution retirement plan for Omani employees in accordance with the Omani Social Insurance Scheme are recognised
in profit or loss as incurred.
Provisions
General
A provision is recognised in the statement of financial position when the Company has a legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate of the amount thereof can be
made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
Site restoration provision
The provision for site restoration costs arose on construction of the networking sites. A corresponding asset is recognised in property, plant and
equipment. Site restoration costs are provided at the present value of expected costs to settle the obligation using estimated cash flows. The cash
flows are discounted at a current pre-tax rate that reflects the risks specific to the site restoration liability. The unwinding of the discount is expensed
as incurred and recognised in the profit or loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and
adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.
Annual Report 2012 | 55
Notes to the Financial Statements | Year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Leases
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at
the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged directly to profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease
payments are recognised in profit or loss on a straight-line basis over the lease term.
Royalty
Royalty is payable to the Telecommunication Regulatory Authority of the Sultanate of Oman on an accrual basis.
Financial instruments
Trade and other receivables
Trade and other receivables are initially recognised at cost and subsequently measured at amortised cost, using the effective interest method. An
estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility
of recovery.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances, and short-term deposits with
an original maturity of three months or less, net of outstanding bank overdrafts.
Interest-bearing borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense of the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial
instrument to the net carrying amount of the financial liability. Instalments due within one year at amortised cost are shown as a current liability.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process. Interest costs are
recognised as an expense when incurred except those that qualify for capitalisation.
Accounts payable and accruals
Trade payables are initially measured at their fair value at the time of transaction and subsequently measured at amortised cost, using the effective
interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the
financial instrument to the net carrying amount of the financial liability. Liabilities are recognised for amounts to be paid for goods and services
received, whether or not billed to the Company.
Derivative financial instruments
The Company makes use of derivative instruments to manage exposures to interest rate, including exposures arising from forecast transactions.
In order to manage interest rate risks, the Company applies hedge accounting for transactions which meet the specified criteria.
At inception of the hedge relationship, the Company formally documents the relationship between the hedged item and the hedging instrument,
including the nature of the risk, the objective and strategy for undertaking the hedge, and the method that will be used to assess the effectiveness
of the hedging relationship.
56 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivative financial instruments (Continued)
Also at the inception of the hedge relationship, a formal assessment is undertaken to ensure that the hedging instrument is expected to be
highly effective in offsetting the designated risk in the hedged item. A hedge is regarded as highly effective if the changes in fair value or cash
flows attributable to the hedged risk during the period for which the hedge is designated are expected to offset in a range of 80% to 125%.
For situations where that hedged item is a forecast transaction, the Company assesses whether the transaction is highly probable and presents
an exposure to variations in cash flows that could ultimately affect the profit or loss.
Cash flow hedges
For designated and qualifying cash flow hedges, the effective portion of the gain or loss on the hedging instrument is initially recognised directly
in the statement of comprehensive income in the cash flow hedge reserve. The ineffective portion of the gain or loss on the hedging instrument
is recognised immediately in profit or loss.
When the hedged cash flow affects the profit or loss, the gain or loss on the hedging instrument is ‘recycled’ in the corresponding income or
expense line of the statement of comprehensive income. When a hedging instrument expires, or is sold, terminated, exercised, or when a hedge
no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in other comprehensive income remains
in equity until the forecasted transaction or firm commitment affects profit or loss. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss recorded in equity is recognised in profit or loss.
The fair value of unquoted derivatives is determined by the discounted cash flows method.
Derecognition of financial assets and financial liabilities
Financial assets:
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired; or
• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement; and
• Either (a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities:
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty
about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability
affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are set out in note 25.
Annual Report 2012 | 57
Notes to the Financial Statements | Year ended 31 December 2012
4REVENUE
Traffic
One time and recurring charges
Interconnection revenue
Inbound roaming
Less: Distributor discounts
2012
OMR ‘000
2011
OMR ‘000
170,442
1,531
24,108
5,360
201,441
(7,941)
193,500
171,683
1,927
26,490
4,724
204,824
(7,959)
196,865
2012
OMR ‘000
2011
OMR ‘000
29,903
3,796
13,125
8,254
4,979
77
60,134
25,128
4,656
11,805
9,501
3,759
(3)
54,846
2012
OMR ‘000
2011
OMR ‘000
22,424
5,822
4,193
1,968
1,720
221
3,280
4,628
44,256
23,192
5,889
3,958
2,093
2,072
217
2,710
4,330
44,461
5 OPERATING EXPENSES
Interconnection charges, net of volume rebate
Cost of equipment sold and other services
Repairs and maintenance
Lease lines and frequency fee
Rental and utilities
Allowance for inventory obsolescence
6 GENERAL AND ADMINISTRATIVE EXPENSES
Employees’ salaries and associated costs
Service fees (note 21)
Sales and marketing
Legal and professional charges
Allowance for impairment losses on trade receivables (note 12)
Commission on cards
Rental and utilities
Others
58 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
7 FINANCING COSTS (NET)
Interest on term loan
Site restoration – unwinding of discount (note 18)
Interest income on deposits
Other interest
2012
OMR ‘000
2011
OMR ‘000
1,554
100
(326)
23
1,351
2,992
204
(77)
82
3,201
2012
OMR ‘000
2011
OMR ‘000
4,594
569
5,163
6,210
267
6,477
4,594
207
4,801
6,210
173
6,383
(616)
(569)
(39)
(1,224)
(153)
(267)
(196)
(616)
8 INCOME TAX
Statement of income
Current year
Deferred tax relating to origination and reversal of temporary differences
Current liability
Current year
Prior year
Deferred tax liability
Beginning of the year
Movement for the year through profit or loss
Movement for the year through statement of other comprehensive income
At the end of the year
Annual Report 2012 | 59
Notes to the Financial Statements | Year ended 31 December 2012
8 INCOME TAX (Continued)
The deferred tax asset/(liability) comprises the following types of temporary differences:
Property, plant and equipment
Provisions
Net unrealised gains on cash flow hedges
2012
OMR ‘000
2011
OMR ‘000
(1,851)
626
(1,225)
1
(1,224)
(1,489)
833
(656)
40
(616)
Set out below is a reconciliation between income tax calculated on accounting profits with income tax expense for the year:
Profit before tax
Tax at applicable rate
Non-deductible expenses and other permanent differences
Deferred tax relating to origination and reversal of temporary differences
2012
OMR ‘000
2011
OMR ‘000
42,139
5,053
(459)
569
5,163
53,989
6,475
(265)
267
6,477
The tax rate applicable to the Company is 12% (2011: 12%). Deferred tax asset/liability is recorded at 12% (2011: 12%). For the purpose of
determining the taxable results for the year, the accounting profit of the Company has been adjusted for tax purposes. Adjustments for tax
purposes include items relating to both income and expense. The adjustments are based on the current understanding of the existing laws,
regulations and practices.
The Company’s tax assessments up to 2006 have been completed. Management is of the opinion that additional taxes, if any, that may be assessed
on completion of the assessments for the open tax years would not be significant to the Company’s financial position at 31 December 2012.
9 BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the profit for the year by the weighted average number of shares outstanding during the year
as follows:
Profit for the year (OMR’000)
Weighted average number of shares outstanding for the year (number in thousand)
Basic earning per share (OMR)
60 | Nawras – Omani Qatari Telecommunications Company SAOG
2012
2011
36,976
650,944
0.057
47,512
650,944
0.073
Notes to the Financial Statements | Year ended 31 December 2012
9 BASIC AND DILUTED EARNINGS PER SHARE (Continued)
No figure for diluted earnings per share has been presented as the Company has not issued any instruments which would have an impact
on earnings per share when exercised.
Net assets per share is calculated by dividing the equity attributable to the shareholders of the Company at the reporting date by the number
of shares outstanding.
Net assets (OMR’000)
Number of shares outstanding at the reporting date (number in thousands)
Net assets per share (OMR)
2012
2011
180,049
650,944
0.277
167,519
650,944
0.257
10 PROPERTY, PLANT AND EQUIPMENT
Cost
1 January 2012
Additions
Capitalised during the year
Disposals
31 December 2012
Depreciation
1 January 2012
Charge for the year
Disposals
31 December 2012
Net book value
31 December 2012
Mobile/fixed
exchange and
network equipment
OMR ‘000
Subscriber
apparatus and
other equipment
OMR ‘000
Buildings
OMR ‘000
Capital work
in progress
OMR ‘000
Total
OMR ‘000
225,464
33,880
10,350
(776)
268,918
27,754
2,760
1,551
(14)
32,051
1,459
1,073
3,320
5,852
22,763
23,742
(15,221)
31,284
277,440
61,455
(790)
338,105
74,033
25,120
(388)
98,765
21,109
3,582
(14)
24,677
160
367
527
-
95,302
29,069
(402)
123,969
170,153
7,374
5,325
31,284
214,136
Annual Report 2012 | 61
Notes to the Financial Statements | Year ended 31 December 2012
10 PROPERTY, PLANT AND EQUIPMENT (Continued)
Cost
1 January 2011
Additions
Capitalised during the year
Disposals
31 December 2011
Depreciation
1 January 2011
Charge for the year
Disposals
31 December 2011
Net book value
31 December 2011
Mobile/fixed
exchange and
network equipment
OMR ‘000
Subscriber
apparatus and
other equipment
OMR ‘000
Buildings
OMR ‘000
Capital work
in progress
OMR ‘000
Total
OMR ‘000
175,293
15,054
35,117
225,464
24,762
2,835
179
(22)
27,754
363
662
434
1,459
36,181
22,312
(35,730)
22,763
236,599
40,863
(22)
277,440
52,544
21,489
74,033
18,368
2,763
(22)
21,109
66
94
160
-
70,978
24,346
(22)
95,302
151,431
6,645
1,299
22,763
182,138
Addition for the year ended 31 December 2012 is net of reversal of provision for site restoration of OMR 1,487,000 (year ended 31 December 2011
includes provision for site restoration cost of OMR 207,000) (note 18). This has been adjusted in the cash outflow on purchase of property plant
and equipment in the statement of cash flows.
11 LICENCE FEE
Cost
Balance at 1 January 2012
Additions during the year
Balance at December 2012
Amortisation
Balance at 1 January 2012
Amortisation during the year
Balance at 31 December 2012
Net book value
At 31 December 2012
62 | Nawras – Omani Qatari Telecommunications Company SAOG
Mobile licence
OMR ‘000
Fixed line licence
OMR ‘000
Total
OMR ‘000
42,331
350
42,681
21,403
21,403
63,734
350
64,084
19,165
2,844
22,009
2,144
856
3,000
21,309
3,700
25,009
20,672
18,403
39,075
Notes to the Financial Statements | Year ended 31 December 2012
11 LICENCE FEE (Continued)
Cost
Balance at 1 January 2011
Additions during the year
Balance at December 2011
Amortisation
Balance at 1 January 2011
Amortisation during the year
Balance at 31 December 2011
Net book value
At 31 December 2011
Mobile licence
OMR ‘000
Fixed line licence
OMR ‘000
Total
OMR ‘000
42,331
42,331
21,403
21,403
63,734
63,734
16,327
2,838
19,165
1,288
856
2,144
17,615
3,694
21,309
23,166
19,259
42,425
Licence fee represents the amount paid to the Telecommunication Regulatory Authority of the Sultanate of Oman for obtaining the licence to operate
as fixed and mobile telecommunication service provider. Licence fee is stated at cost less accumulated amortisation and impairment losses.
In accordance with the terms of mobile and fixed line licences granted to the Company, a royalty is payable to the Government of the Sultanate of
Oman. The royalty payable is calculated based on 7% of the net of predefined sources of revenue and interconnection expenses to local operators.
12 RECEIVABLES AND PREPAYMENTS
Post paid receivable
Amount due from distributors
Receivable from other operators
Unbilled receivables
Less: allowance for impaired receivables
Prepaid expenses and other receivables
Deferred cost
2012
OMR ‘000
2011
OMR ‘000
3,880
9,406
5,754
4,047
23,087
(2,836)
20,251
9,436
368
30,055
4,325
10,073
5,718
4,268
24,384
(2,907)
21,477
7,710
515
29,702
Annual Report 2012 | 63
Notes to the Financial Statements | Year ended 31 December 2012
12 RECEIVABLES AND PREPAYMENTS (Continued)
As at 31 December 2012, trade receivables at nominal value of OMR 2,836,067 (2011: OMR 2,907,348) were impaired. Movements in allowance for
impairment of receivables were as follows:
At 1 January
Charge for the year (note 6)
Written off during the year
2012
OMR ‘000
2011
OMR ‘000
2,907
1,720
(1,791)
2,836
1,698
2,072
(863)
2,907
As at 31 December, the ageing of unimpaired trade receivables is as follows:
Past due but not impaired
Total
OMR ‘000
Neither past due
nor impaired
OMR ‘000
30-60 days
OMR ‘000
60-90 days
OMR ‘000
Over 90 days
OMR ‘000
20,251
21,477
17,348
18,152
471
780
255
755
2,177
1,790
2012
2011
Unimpaired receivables are expected, on the basis of past experience, to be substantially recoverable. It is not the practice of the Company to
obtain collateral over receivables, and virtually all are therefore unsecured. However, sales made to distributors are backed with their corporate/
bank guarantees and certain post paid customers’ balances are secured by deposits.
13 BANK BALANCES AND CASH
Included in bank balances and cash are bank deposits of OMR 554,704 (31 December 2011: OMR 2,003,304) with certain commercial banks in Oman.
The Company is required to maintain certain service deposit balances to comply with the requirements of its term loan agreement. As of 31
December 2012, the balances in these service deposit accounts amounted to OMR 569 (31 December 2011: OMR 15,236,157) and these are
denominated in USD.
14 SHARE CAPITAL AND DIVIDENDS
Authorised
2012
OMR ‘000
Ordinary shares
70,000
2011
OMR ‘000
70,000
Issued and fully paid
2012
2011
OMR ‘000
OMR ‘000
65,094
65,094
Major shareholders
Details of shareholders who hold 10% or more of the Company’s shares are as follows:
TDC-Qtel Mena Investcom BSC
64 | Nawras – Omani Qatari Telecommunications Company SAOG
2012
Number of shares
%
2011
Number of shares
%
358,019,310
55
358,019,310
55
Notes to the Financial Statements | Year ended 31 December 2012
14 SHARE CAPITAL AND DIVIDENDS (Continued)
Dividends
The Company’s shareholders at the annual general meeting held on 26 March 2012 approved a payment of baisa 38 per share as dividend for the
financial year ended 31 December 2011 and this was paid in April 2012.
The Directors have proposed a dividend of baisa 38 per share for year ended 31 December 2012, amounting to OMR 24,735,881. This is subject
to approval of the Company’s shareholders at the Annual General Meeting to be held in March 2013.
15 STATUTORY RESERVE
Article 106 of the Commercial Companies Law of 1974 requires that 10% of the Company’s profit for the year be transferred to a non-distributable
statutory reserve until the amount of statutory reserve becomes equal to one third of the Company’s issued share capital. This reserve is not
available for distribution.
16 DERIVATIVE FINANCIAL INSTRUMENTS
In 2006, the Company entered into two interest rate swap arrangements with Qatar National Bank and BNP Paribas to cap its exposure to
fluctuating interest rates on its term loan. The loan amount covered under the swap agreement has been fully paid and the swap arrangement
expired in March 2012. Under the swap agreements, the Company was committed to pay a fixed interest rate of 5.348% per annum and receive
a floating interest rate based on 3 month US $ LIBOR.
During 2012, the Company entered into two interest rate swap arrangements with Qatar National Bank to mitigate the risk of the fluctuating interest
rates on its term loan (note 17). The key terms of the arrangements are as below:
SN
Notional Amount
Effective Date
Termination Date
Pay Fixed
Receive Floating
1
2
USD 10,000,000
USD 12,000,000
27 Dec 2012
27 Dec 2012
29 Dec 2014
29 Dec 2016
0.335%
0.555%
1 month USD LIBOR
1 month USD LIBOR
The swap arrangement qualifies for hedge accounting under IAS 39, and as at 31 December 2012, the unrealised loss of OMR 8,000 relating
to measuring the financial instruments at fair value is included in equity in respect of these contracts (31 December 2011: OMR 336,682).
The table below shows the negative fair value of the swaps, which is equivalent to the market values, together with the notional amounts analysed
by the term to maturity.
31 December 2012
Interest rate swaps
31 December 2011
Interest rate swaps
Notional amount by term to maturity
1 - 12
More than 1
months
up to 5 years
OMR ‘000
OMR ‘000
Negative
fair value
OMR ‘000
Notional amount
total
OMR ‘000
Over 5
years
OMR ‘000
8*
8,472
-
8,472
-
337*
27,727
27,727
-
-
*Negative fair value shown under equity in the statement of financial position is net of deferred tax of OMR 874 (2011: OMR 40,402).
Annual Report 2012 | 65
Notes to the Financial Statements | Year ended 31 December 2012
17 INTEREST BEARING BORROWINGS
Total interest bearing borrowings
Less: deferred financing costs
Less: current portion of term loan
Non-current portion
2012
OMR ‘000
2011
OMR ‘000
28,479
(839)
27,640
(6,701)
20,939
55,166
(11)
55,155
(33,215)
21,940
The Company entered into a new syndicated loan facility agreement in February 2012 by repaying its original facility of USD 143 million fully.
The new facility consist of a long-term five year amortising loan facility of USD 87 million (OMR 33.5 million) and a 5 year Revolving Credit Facility
of OMR 24 million.
The banking syndicate included international and national banks.
The term loan of USD 87 million is repayable in twenty quarterly instalments commencing from May 2012.
Both facilities bear interest at US LIBOR plus margin.
The loan agreement contains two financial covenants, being a maximum leverage ratio and a minimum interest cover ratio.
18 SITE RESTORATION PROVISION
Site restoration provision as of the reporting date amounted to OMR 2,255,645 (31 December 2011: OMR 3,642,583). The Company is committed
to restore each site as it is vacated. A movement schedule is set out below:
Balance at 1 January
(Reduction) / additional provision during the year
Unwinding of discount (note 7)
Balance at the end of the year
2012
OMR ‘000
2011
OMR ‘000
3,643
(1,487)
100
2,256
3,232
207
204
3,643
2012
OMR ‘000
2011
OMR ‘000
926
783
72
1,355
19 EMPLOYEE BENEFITS
Non-current
Employees’ end of service benefits
Current
IPO incentive – Shadow shares
66 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
19 EMPLOYEE BENEFITS (Continued)
The Company has granted to its employees a certain number of shadow (virtual) shares as per the announcement made during its IPO and these
are to be settled in cash. The cost of the shadow shares is measured initially at the fair value at the grant date with reference to the market price of
the Company’s shares. The fair value is expensed immediately. On 1st July 2011 the Company entered into a hedge agreement to reduce its risk of
share fluctuation, and any gain or loss from re-measuring the hedge instrument at fair value is expensed immediately. The liability is re-measured
to fair value at each reporting date up to and including the settlement date, with changes in fair value recognised in profit or loss. During the year the
obligation under the shadow shares scheme relating to the employee retention programme were settled, based on the market value in March 2012.
20 PAYABLES AND ACCRUALS
Trade accounts payable
Accrued expenses – operating expenses
Accrued expenses – capital expenses
Amounts due to related parties (note 21)
Deposits from customers
2012
OMR ‘000
2011
OMR ‘000
26,457
22,078
28,618
2,100
225
79,478
13,431
21,897
17,421
1,800
328
54,877
21 RELATED PARTY TRANSACTIONS
Related parties represent associated companies, major shareholders, directors and key management personnel of the Company, and entities
controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the
Company’s management.
Details regarding transactions with the related parties included in the financial statements are set out below:
2012
Other related
Directors and
parties
key management
OMR ‘000
OMR ‘000
Directors’ and key management remuneration
Service fee (note 6)
Other expenses
5,822
1,004
6,826
1,977
1,977
2011
Other related
Directors and
parties
key management
OMR ‘000
OMR ‘000
5,889
1,297
7,186
1,418
1,418
Effective 1 January 2008, the Company has entered into a technical and service agreement with a related party (other related party). In consideration
of services provided, the Company pays a service fee to the related party which is calculated annually in an amount equal to 3% of the Company’s
gross revenue.
Annual Report 2012 | 67
Notes to the Financial Statements | Year ended 31 December 2012
21 RELATED PARTY TRANSACTIONS (Continued)
Trade payable balances with related parties included in the statement of financial position are as follows:
Major shareholders
Other related parties
2012
OMR ‘000
2011
OMR ‘000
18
2,082
2,100
47
1,753
1,800
2012
OMR ‘000
2011
OMR ‘000
1,727
200
50
1,977
1,177
200
41
1,418
Compensation of key management personnel
The remuneration of members of key management and directors during the year was as follows:
Salaries / remuneration and benefits
Director’s remuneration
Employees’ end of service benefits
The majority of the increase is attributable to long-term incentive obligations for senior management (2011: Nil). The balance of the increase
is attributable to the addition of new senior management in Q4 2011.
22 EXPENDITURE COMMITMENTS
Capital expenditure commitments
Estimated capital expenditure contracted for at the reporting date but not provided for:
Property, plant and equipment
Operating lease commitments
Future minimum lease payments:
Within one year
After one year but not more than five years
More than five years
Total operating lease expenditure contracted for at the reporting date
68 | Nawras – Omani Qatari Telecommunications Company SAOG
2012
OMR ‘000
2011
OMR ‘000
24,612
10,541
5,958
12,390
10,317
28,665
10,764
13,235
12,974
36,973
Notes to the Financial Statements | Year ended 31 December 2012
23 CONTINGENT LIABILITIES
Guarantees
At 31 December 2012, the Company had contingent liabilities in respect of a performance bond guarantee of OMR 6.6 million (2011: OMR 6.6 million)
in the ordinary course of business from which no material liabilities are expected to arise.
Claims
The Company has resolved the claim with the Telecommunication Regulatory Authority (TRA) regarding the calculation of certain fees payable
by the Company under its mobile and fixed licences.
24 RISK MANAGEMENT
The Company’s principal financial liabilities, other than derivatives, comprise bank loans, and payables and accruals. The main purpose of these
financial instruments is to raise finance for the Company’s operations. The Company has various financial assets such as trade receivables and
cash and short-term deposits, which arise directly from its operations. The Company also enters into derivative transactions, primarily interest
rate swaps. The purpose is to manage the interest rate risks arising from the Company’s operations and its sources of finance.
The main risks arising from the Company’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company’s exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates.
The Company’s bank deposits carry fixed rates of interest and therefore are not exposed to interest rate risk.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the
Company enters into interest rate swaps, in which the Company agrees to exchange, at specified intervals, the difference between fixed and
variable rate interest amounts calculated by reference to an agreed upon notional principal amount.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Company trades only with recognised, creditworthy dealers and operators. Its three largest dealers’ balances account for 45% of outstanding
unimpaired trade receivable at 31 December 2012 (2011: 47%). The Company obtains bank/corporate guarantees from its dealers in order
to mitigate its credit risk. It is the Company’s policy that certain credit verification is performed for all of the Company’s post paid subscribers.
In addition, receivable balances are monitored on an ongoing basis.
With respect to credit risk arising from the other financial assets of the Company, including cash and cash equivalents, the Company’s exposure
to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
The Company’s’ credit risk with regard to bank deposits is limited as the majority of funds are placed with a bank that has a Moody’s short-term
deposit rating of Prime-1.
Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Company’s payable and accruals include amounts payable in US Dollars. As of the reporting date this USD denominated
payable amount was approximately 47% (31 December 2011: 44%) of the Company’s total payables and accruals. The Company’s long-term
borrowings and certain bank deposits amounting to OMR 28,478,145 and OMR 1,523,743 respectively are denominated in US Dollars. The Omani
Rial is pegged to the US Dollar. There are no other significant financial instruments in foreign currency other than US Dollars and consequently
foreign currency risk is mitigated.
Annual Report 2012 | 69
Notes to the Financial Statements | Year ended 31 December 2012
24 RISK MANAGEMENT (Continued)
Liquidity risk
The Company limits its liquidity risk by ensuring bank facilities are available. The Company’s terms of sales require amounts to be paid within
30 days of the date of sale. A major portion of the Company’s sale is generated through sale of prepaid cards.
The table below summarises the maturities of the Company’s undiscounted financial liabilities, based on contractual payment dates and current
market interest rates.
As at 31 December 2012
Less than 3 months
OMR ‘000
3 to 12 months
OMR ‘000
1 to 5 years
OMR ‘000
> 5 years
OMR ‘000
Total
OMR ‘000
1,675
77,153
2,100
161
81,089
5,026
225
425
5,676
21,778
859
22,637
-
28,479
77,378
2,100
1,445
109,402
Less than 3 months
OMR ‘000
3 to 12 months
OMR ‘000
1 to 5 years
OMR ‘000
> 5 years
OMR ‘000
Total
OMR ‘000
30,471
52,749
1,800
1,829
86,849
2,744
328
125
3,197
21,951
997
22,948
-
55,166
53,077
1,800
2,951
112,994
Interest bearing borrowings
Payables and accruals
Due to related parties
Interest on term loan
Total
As at 31 December 2011
Interest bearing borrowings
Payables and accruals
Due to related parties
Interest on term loan
Total
Operational risk
Operational risk is the risk of loss arising from inadequate or failed internal processes, human error, systems failure or from external events.
The Company has a set of policies and procedures, which are approved by the Board of Directors and are applied to identify, assess and supervise
operational risk. The management ensures compliance with policies and procedures and monitors operational risk as part of overall risk management.
Internal audit function is also utilised by the Company in mitigating this risk.
Capital management
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital
structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were
made in the objectives, policies or processes during the year ended 31 December 2012 and year ended 31 December 2011. Capital comprises share
capital and retained earnings, and is measured at OMR 159,678,000 as at 31 December 2012 (31 December 2011: OMR 151,136,000).
70 | Nawras – Omani Qatari Telecommunications Company SAOG
Notes to the Financial Statements | Year ended 31 December 2012
25 KEY SOURCES OF ESTIMATION UNCERTAINTY
Deferred tax assets
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the asset can be utilised.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and level of future taxable profits together with future tax planning strategies. Further details are included in note 8.
Impairment of accounts receivable
An estimate of the collectible amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually
significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are
assessed collectively and an allowance applied according to the length of time past due, based on historical recovery rates.
At the reporting date, gross trade accounts receivable were OMR 23,087,000 (2011: OMR 24,384,000) and the provision for doubtful debts is
OMR 2,836,000 (2011: OMR 2,907,000). Any difference between the amounts actually collected in future periods and the amounts expected will
be recognised in the profit or loss. The related details are set out in note 12.
Provision for site restoration
The Company has recognised a provision for site restoration associated with the sites leased by the Company. In determining the amount of the
provision, assumptions and estimates are required in relation to discount rates and the expected cost to dismantle and remove equipment from the
site and restore the land to its original condition. The carrying amount of the provision as at 31 December 2012 is OMR 2,256,000 (31 December
2011 – OMR 3,643,000). The related details are set out in note 18.
In order to reflect current market conditions affecting the site restoration costs, a review of the estimates was carried out during the year
by the management including inflation rate, interest rate, number of sites and costs per site, and as a result a decrease in provision was made.
Impairment of inventories
Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net
realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually
significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree
of ageing or obsolescence, based on historical selling prices.
At the reporting date goods for resale were OMR 1,466,915 (31 December 2011: OMR 1,035,000) and the allowance for obsolete inventory
amounted to OMR 442,159 (2011: OMR 365,000). Any difference between the amounts actually realised in future periods and the amounts
expected will be recognised in the profit or loss.
Impairment of non-financial assets
The Company assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. These assets are also
tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken,
management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order
to calculate the present value of those cash flows.
Depreciation
Depreciation is charged so as to write off the cost of assets over their estimated useful lives. The calculation of useful lives is based on management’s
assessment of various factors such as the operating cycles, maintenance programmes, and normal wear and tear using best estimates.
Going concern
The Company’s management has made an assessment of the Company’s ability to continue as a going concern and is satisfied that the Company
has the resources to continue in business for the foreseeable future. Furthermore, the management is not aware of any material uncertainties that
may cast significant doubt upon the Company’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared
on the going concern basis.
Annual Report 2012 |
71
Notes to the Financial Statements | Year ended 31 December 2012
26 SEGMENT INFORMATION
Information regarding the Company’s operating segments is set out below in accordance with the IFRS 8 – Operating Segments.
For management purposes, the Company is organised into business units based on their product and services and has two reportable operating
segments as follows:
1.Operation of Global System for Mobile Communication (GSM) for prepaid and post paid services, sale of telecommunication equipment and
other associated services.
2.Provision of international and national voice and data services from fixed line, sale of telecommunication equipment and other associated services.
Management monitors the operating results of its business for the purpose of making decisions about resource allocation and performance assessment.
Transfer prices between operating segments are on an arm’s-length basis in a manner similar to transactions with third parties.
Segment revenue and results
A segment result represents the profit earned by each segment without allocation of finance income or finance cost.
The Company commenced its fixed line services in May 2010 and its operations are mainly confined to the Sultanate of Oman.
Segmental results for the year ended 31 December 2012 are as follows:
Revenue
External sales
Inter-segment sales
Total revenue
Results
Depreciation
Amortisation
Segment results – Profit
Finance expense
Profit before taxation
Taxation
Profit for the year
72 | Nawras – Omani Qatari Telecommunications Company SAOG
Mobile
OMR ‘000
Fixed line
OMR ‘000
Adjustments
OMR ‘000
Total
OMR ‘000
177,336
3,364
180,700
16,164
23,809
39,973
(27,173)
(27,173)
193,500
193,500
23,038
2,844
42,340
6,031
856
1,150
-
29,069
3,700
43,490
(1,351)
42,139
(5,163)
36,976
Notes to the Financial Statements | Year ended 31 December 2012
26 SEGMENT INFORMATION (Continued)
Segment revenue and results (Continued)
Segmental results for the year ended 31 December 2011 are as follows:
Revenue
External sales
Inter-segment sales
Total revenue
Results
Depreciation
Amortisation
Segment results – Profit
Finance expense
Profit before taxation
Taxation
Profit for the year
Mobile
OMR ‘000
Fixed line
OMR ‘000
Adjustments
OMR ‘000
Total
OMR ‘000
185,440
2,847
188,287
11,425
21,589
33,014
(24,436)
(24,436)
196,865
196,865
19,702
2,838
54,689
4,644
856
2,501
-
24,346
3,694
57,190
(3,201)
53,989
(6,477)
47,512
2012
OMR ‘000
2011
OMR ‘000
56,605
4,850
61,455
29,183
11,680
40,863
Capital expenditure incurred for different segments is as follows:
Property, plant and equipment
- Mobile
- Fixed
27 FAIR VALUES OF FINANCIAL INSTRUMENTS
Financial instruments comprise financial assets, financial liabilities and derivatives.
Financial assets consist of cash and bank balances, and receivables. Financial liabilities consist of term loans, and payables. Derivatives consist
of interest rate swap contracts.
The fair value of financial assets and liabilities are considered by the Company’s Board of Directors not to be materially different from their
carrying amounts.
Annual Report 2012 | 73
Notes to the Financial Statements | Year ended 31 December 2012
27 FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2:other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3:techniques that use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
As at 31 December 2012, the Company held interest rate swap derivatives instruments measured at fair value. The fair values of the interest rate
swaps arrangements are worked out using the level 2 valuation technique. The related fair value details are provided by the swap counter party.
2012
Interest rate swap
2011
Interest rate swap
Level 1
OMR ‘000
Level 2
OMR ‘000
Level 3
OMR ‘000
Total
OMR ‘000
-
8
-
8
Level 1
OMR ‘000
Level 2
OMR ‘000
Level 3
OMR ‘000
Total
OMR ‘000
-
337
-
337
There were no transfers between the levels during the current as well as the previous year.
28 COMPARATIVE AMOUNTS
The following corresponding figures for 2011 have been reclassified in order to conform with the presentation for the current period:
Statement of income
2011
Previously
reported
OMR ‘000
Operating expenses
(29,578)
General and
administrative expenses
(69,739)
Other income
Financing costs
2011
Currently
reported
OMR ‘000
424
(3,278)
(102,171)
(54,846) Reclassification of repairs and maintenance, lease lines and frequency fee,
and rental and utilities-network from general and administrative expense
(44,461) Reclassification of repairs and maintenance, lease lines and frequency fee,
and rental and utilities-network to operating expense.
Reclassification of currency exchange loss/gain to other income
337 Reclassification of interest income to financing costs.
Reclassification of currency exchange loss/gain from general and
administrative expense.
(3,201) Reclassification of interest income from other income.
(102,171)
These reclassifications have been made to improve the quality of information presented. The reclassifications do not affect the reported profit
for the year 2011 and hence have no impact on the statement of financial position. Accordingly, the statement of financial position for 2010 has not
been presented.
29 EVENTS AFTER REPORTING PERIOD
In early 2013, the Company signed a new term loan agreement worth USD 234 million (OMR 90 million) for capital expenditure and working
capital requirements with a consortium of banks. The loans consists of a term loan worth USD 182 million (OMR 70 million) with a five-year tenure
and a revolving credit facility of USD 52 million (OMR 20 million) with a three year tenure.
74 | Nawras – Omani Qatari Telecommunications Company SAOG
Nawras Firsts
Setting the
standard
for telecoms
in Oman
2005
Nawras fundamentally changed Oman’s mobile
telecommunications landscape by introducing numerous
innovations. These included payment through banks, data
services using 2G EDGE, distant independent tariffs, web-based
customer services, My Nawras, missed call notice, international
roaming for prepaid, international data roaming, a new mobile
office solution in cooperation with Microsoft, prepaid to prepaid
credit transfer, the Nawras rewards programme, Nawras Zone,
and Nawras’ web portal that provided content such as flight
information, restaurants, cinema, and global weather.
2006
Firsts in 2006 included the trial of 3G services, e-recharge,
post2prepaid migration, the launch of Mobile Number Portability,
business CUG, e-billing for business, and a special offer for OPAL
member companies, employees and families.
2007
Market-leading initiatives included postpaid to prepaid credit
transfer, ‘Rannati’ personalised greeting content for customers,
international data roaming for prepaid, WebSMS, 3G+ video
calling, video monitoring, mobile broadband, and mobile info
browsing, ‘Call Me’ notification service, and the ‘Send Me Credit’
notification service.
2008
Nawras Firsts in 2008 included the Nawras mobile store, in-flight
roaming, international MMS roaming for prepaid, prepaid mobile
broadband, breaking news and daily sports news sent by SMS,
voice SMS, wireless data link, Elite Club, e-payment for postpaid,
self-service machines, and Shababiah – Nawras youth sub-brand.
2009
An extensive range of Firsts came to the market, from BawaBaty
web portal, Mobile TV, Mawjood notification service, and Nawras
SMS link – to Muscat Municipality services, MyNawras for business,
MobiKhazana SMS service, Asian-based content, SmartRoamer,
saving on roaming within the GCC region, Future SMS, Flash SMS
and SMS2Email, a new e-newsletter for business, Oman Air
information via SMS, and SMS classified advertisements.
2010
Collect calls, business broadband share, micro SIMs for the
Apple iPad, and the Alafasy Qur’an service were introduced.
We also expanded the appeal of Oman’s only telecom customer
loyalty programme – Nawras Elite Club – adding various new
benefits and privileges including free car parking, access to
business lounges and meet-and-greet services at Muscat Airport,
roadside assistance, priority call handling at Nawras customer
care, and many attractive discounts at retail outlets.
2011
The innovative spirit continued, with Nawras Backstage
presenting NE-YO Live in Muscat and the MyNawras HD App
for iPad being launched. The new Elite Program introduced Silver
membership and product ‘firsts’ included Bill Analyser; Rannati
copy tune service; Emsakeyah, Qasas Al-Anbeya, and Eazaz
Al Qur’an Arabic and Qur’anic services; 6+6 international offer
giving customers six free minutes after making an international
call lasting six minutes; Elite rewards for receiving calls; free
Internet Performance Reports for corporate customers; Business
Mousbak prepaid service for corporate customers; and a prepaid
solution for postpaid customers.
2012
Continued emphasis on making our customers’ lives easier
and increasing their choices saw a number of notable firsts in
social media, apps and data: the Facebook SMS service; new
data bundles, including an off-peak monthly mobile broadband
bundle; a free SMS notification service to show data usage when
roaming; an SMS news service in association with Reuters; and
international credit transfer.
We showcased the latest 4G for the first time in Oman; were
one of the first companies to obtain ISO status for its entire IT
Department, with the award of ISO 27001 certification for secure
data storage and handling; and our flagship store in Muscat
Grand Mall opened at the end of the year – the first of its kind
in the Sultanate.
The introduction of a fixed number portability (FNP) service
in Oman gives our business customers the opportunity to
keep their existing numbers when joining Nawras from another
telecommunications operator. Additionally, the first Global
Virtual Private Network (GVPN), in association with Tata
Communications, offers multinational companies global reach,
via our domestic network, to more than 200 of the world’s main
business hubs and data centres.
Our aim is to provide
market-leading product
and service innovations
that provide customers
with the latest outstanding
features and capabilities.
Annual Report 2012
Nawras – Omani Qatari Telecommunications Company SAOG Annual Report 2012
PO Box 874, PC 111, Muscat, Sultanate of Oman
Tel.: +968 9501 1500, 2200 2200
www.nawras.om
SGS-COC-004492