Omantel revises down annual net profit on WorldCall losses

3/1/2016 8:44:41 AM

(MENAFN- Muscat Daily) Muscat-

Omantel said its group net profit has been impacted by the impairment of investment in its Pakistan subsidiary - WorldCall Telecom Ltd (WTL).

The impairment charge after adjusting for tax and share of minority interest amounts to RO55.1mn Omantel said in its annual company report submitted to the Muscat Securities Market (MSM) on Monday.

The Omantel board on Sunday approved the audited financial results for the year ended December 31 2015.

Group net profit for the year came in at RO48.5mn down from RO50.2mn disclosed in the preliminary unaudited results announced last month. Omantel had reported a net profit of RO122.4mn for full year 2014.

'The decrease in net profit by RO1.7mn is attributed to certain adjustments arising on audit increasing the loss of the subsidiary in Pakistan' Omantel said.

Omantel's group revenue for 2015 rose by 6.9 per cent to RO514.3mn. The growth in revenue is mainly driven by broadband revenue which witnessed an overall increase of around 24 per cent the company said. Omantel said it has constantly engaged with WTL investment management activities and in monitoring and evaluation of performance on a continuing basis.

'However this has not resulted in the desired returns on account of significant competition and changes in the regulatory landscape' it said. Omantel said its evaluation has indicated that given the current financial situation of WTL coupled with market challenges it is not likely that turnaround can materialise without significant capital injection.

'Having taken all possible measures we reflected a loss for impairment in our year-end results in line with IFRS.' 'On the way forward the Omantel management is working with WTL management on various strategic options' it noted. WTL's total revenue for the year ended 2015 stands at RO7.2mn down 19.3 per cent from the corresponding period a year earlier.

The company incurred a loss of RO22.5mn against a loss of RO14.1mn in the previous year. Omantel's share in WTL loss increased to RO12.8mn from RO8mn in the previous year. Omantel said the exceptional items arising out of the impairment of investment in WTL and Omantel's Voluntary End of Service (VEoS) programme significantly impacted profitability.

The total cost of the VEoS programme which covers 266 employees of the parent company is estimated at RO12.58mn. 'Notwithstanding the above Omantel's overall financial results show a steadily increasing revenue base from its domestic operations and the wholesale business' Omantel said.

Excluding the impact from WTL and the VEoS programme Omantel's group net profit was RO115mn. The company said most of the impairment impact related to WTL is an accounting loss and will not have any impact on the future liquidity position of the company.

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