Next generation: Investments in infrastructure to make use of new spectrum for LTE services

As Oman’s residents increasingly embrace the latest in wireless technologies, the advent of 4G long-term evolution (LTE) technologies in the sultanate has the potential to make a significant impact on the mobile market. Although the sultanate was relatively late in rolling out 3G services, the precursor to 4G LTE, operators in Oman have been quick to launch the latest in 4G LTE technologies at urban centres, with nationwide coverage progressing steadily.

From 2G To 4G

Challenges persist – infrastructure rollout faces significant obstacles in a large, mountainous country with little in the way of telecoms infrastructure. Delivering the latest services to remote areas of the country is biting into operators’ profit margins. However, increased private sector involvement in 4G LTE projects should soften the impact of expensive development, offering operators a steady long-term growth path moving into 2014.

First launched in the US in 2003, 3G services offered mobile broadband consumers faster broadband internet access than 2G services, revolutionising the mobile industry. These services were first introduced in Oman in 2007 when Nawras began a trial of 3G in Muscat, offering speeds of up to 1 Mbps. Later that year, the firm began offering 3.5G services.

After introducing its own 3G services in 2009, Omantel was the first operator in Oman to introduce LTE services in July 2012, partnering with Swedish telecoms firm Ericsson and China’s Huawei to build trial 4G networks in targeted areas across the sultanate. LTE offers a major speed upgrade, with data rates reaching anywhere from 20-100 Mbps in Oman, compared to 14.4 Mbps for the fastest 3G services. As of July 2013, Omantel’s 4G LTE network covered 37 provinces across 11 governorates, including most of Muscat, via 400 LTE base stations, with the company planning to construct an additional 400-500 LTE base stations by the end of 2014.

Nawras signed an agreement with Huawei in June 2012 to establish its own LTE network under its network turbocharging programme, launching commercial LTE services in Muscat in February 2013. The company’s initial LTE services offer speeds of up to 15 Mbps.

Opening Up The Spectrum

Spectrum allocation, the process of assigning various radio frequencies to telecoms operators, has played a critical role in building up Oman’s LTE networks. Many spectrums were off-limits to commercial providers in the sultanate until March 2012, when the government announced it would open new spectrums to the commercial sector. Spectrums including the 900-MHz and 1800-MHz bands have already been opened to the private sector, with plans to auction the 2.6-GHz and 800-MHz spectrums in 2014.

“The government’s decision to open up the spectrum to the private sector has resulted in huge advancements in telecommunications. The 3G and 4G networks in particular have benefitted from the decision,” Salim Sultan Al Ruzaiqi, the CEO of the Information Technology Authority (ITA), told OBG.

Infrastructure

With new spectrum available, the sultanate is set to increase nationwide LTE coverage in the coming years. However, construction of new base stations and technological upgrades are costly. Nawras has invested around OR60m ($155.4m) in the first phase of its network turbocharging programme, which includes upgrading the core network, building base stations and adding 3.5G technology to existing 2G sites. Omantel announced it would invest OR84m ($217.6m) in LTE infrastructure in 2012, and cited heavy investment in LTE infrastructure as the cause of declining profits in the first quarter of 2013.

Private sector financial involvement will offer both operators a clear path forward. Nawras signed a five-year, $182m financing deal with a consortium of regional banks in January 2013, to cover capital and working expenditures, and in September 2013, the government announced it would sell 19% of its stake in Omantel, worth an estimated $595m, to help fund operating costs and improve competitiveness.