Wednesday, June 29, 2005

Remember E18?


Remember when my camera conked out on me a couple months ago? Believe it or not it's been in the shop ever since. The called me early June 1) the camera was taken to Dubai because they couldn't fix it here, 2) it will cost RO 55 ($140), and 3) it's gonna take about two weeks. I asked if the work will be guaranteed and they said they'll give a 6 month warranty on it so I told them to go ahead. I'll probably get a replacement for it when the new Canon IXUS range gets here or maybe a Nikon S1. But this camera has been my constant companion for two years and it's given me some amazing shots which most people don't believe are from compact camera, it deserves to be fixed. Two weeks kinda stretched out and I totally forgot about it till I got a call today saying that it's finally read.

Amazingly, this lens retraction problem is apparently so common in Canon compact digital cameras, that some days as many as 25% of the visitors to this blog come from a Google keyword search on "Canon E18 error".

Thursday, June 23, 2005

It's a boy!

Birth 1

birth 3

birth 4

birth 5

birth 6

We are happy to announce that we were blessed with a baby boy at 12.50am of June 21st, 2005 after 27 hours of labor. We named him Alfaisal. Al7amd lilah, mother and baby are both doing fine.

Sunday, June 19, 2005

Take a deep breath

Now read this sentence:

Although the Omani firefighters put out the blaze, within an hour, which is understood to have originated from an exhaust vent in the duct room of Mumtaz Mahal, a fine-dining Indian restaurant, at its stunning location atop the Qurum fountain, yesterday afternoon, the staff, the senior officials running the show at the restaurant and others associated with it naturally looked shell-shocked by the incident. [link]

I swear if there was a license given to allow someone to speak English it should be revoked from both the so-called reporter who wrote this crap and the editor who allowed it to be printed.

Man, I hate the Times of Oman.

Wednesday, June 15, 2005

Omantel IPO analysis

Folks, it appears like the nation's press have been given a gag order when it comes to the massive Omantel IPO. This is the biggest thing to ever hit our marke and yet I haven't read a single piece of analysis in the local press. All what we get is repetitive flowery pieces about how this IPO is some sort of gift from the government to the people. I'm not here to tell you that it isn't. In fact there's money to be made in this IPO. I did a quick analysis of the IPO prospectus. I've been debating whether to put it on the blog or not- partly because the analysis gets a bit dry and most people will find it really boring. However, I decided that there might be one or two of you out there who might find this interesting. I apologize for the length. Skip to the next topic or wait till the next one if this doesn't interest you at all.

So the whole country now knows what an IPO is

Half a million application forms have been printed for the Omantel IPO. There's a frenzy of people registering new names and accounts at the depository. I heard as many as 2000 names were being a registered a day in the week before the IPO began. A guy at work told me that rich people are going into poor neighborhoods and buying people's names and IDs (i.e. the right to subscribe for shares in their name). The guy who told me was upset at his brother for giving his own ID to a guy against RO. 500 (the guy sold his brother's ID) and now he can't apply for himself.

Omanel was hoping to get about 55,000 applications which would be twice as many as the biggest previous IPO. If that was the case they'd be able to give 3000 shares to each applicant. It now looks like the number of applicants will definitely be much more than that. People are afraid of subscribing for 3000 shares like Omantel advises. Even people who only have enough for 3000 shares are splitting the applications into as many as 5 or 6 names.

But is it a good deal?

The Omantel IPO is definitely a good deal. The question that should be asked is: "how good a deal is it?" That's where things start to get a bit fuzzy. Quite glaringly, Omantel's prospectus doesn't have a single year's revenue projection. Unbelievable, an IPO prospectus that doesn't talk about the future at all. It's 128 pages long and it took me close to 4 hours to read. And yet there's so much missing from it. One thing that's quite obvious, this company has been horrendously mismanaged in the past. Buying into the share, if you're buying as a long term investment, is basically a bet on the current management that they can turn the company into a more efficient organization. In the short term the company's growth will be strained and it's expenses will increase. In it's effort to recruit higher quality staff and to retain their best employees they have been increasing salaries. As a result the company's staff cost has increased 14% last year despite the actual number of employees growing by just 39. In 2005 costs might grow even more because the company is still hiring and it has been promising its staff that it will raise their salaries after the IPO.

Let's be clear about what this IPO is about. It might be called Omantel, but what we're really buying is Oman Mobile, Omantel's 99% subsidiary. Omantel, i.e. the fixed line and internet company, has very little growth potential. In fact, the fixed line revenue is declining and the internet revenue has shown some growth although quite incredibly the number of internet subscribers has actually dropped. Can you believe that. What kind of statement is that about the country, not the company but the country, is it when the number of internet subscribers drops?!! In 2002 there were 44,000 internet subscribers, in 2003 it increased to 51.7 and the year after it dropped to 48.6.

Oman Mobile is where all the growth is at. Presently Oman Mobile contributes about 60% of Omantel's revenue. In the future this will probably increase. We're constantly told that Oman has huge potential when it comes to mobile communications. That mobile penetration is still low despite Oman Mobile having about 900,000 mobile subscribers in a country of 2.6 million of which 60% of the nationals are under the age 16. This is why Qtel paid over $100 million for the country's second GSM license, right? Well there are two ways to measure Omantel's mobile revenue: either gross revenue or average revenue per user (ARPU). If you look at the gross revenue then it's all rosy, 32 million rial increase in revenue in 2004. But if look at ARPU you'd see that for the last 3 years it's been constant. Post-paid users spend about 23.9 rials a month and pre-paid users spend about 13.4 a month. What does this mean? Quite simply that Omantel has been focusing on increasing the number of subscribers but haven't done anything to make those subscribers spend more. For Oman Mobile the days of selling Hayyak kits at the sinful price of RO. 25 are long over. They can kiss that kind of rip-off revenue goodbye. Nawras is now selling SIM kits for RO. 14 which include 14 rials of credit. They're basically giving it away for free. Now that Oman Mobile finally has competition, they have to focus on getting their users to spend more. Talk more. Use more value added services. Send more picture messages. Buy ring tones from Oman Mobile's portal, etc. Just selling SIM cards and packages isn't enough. Now Oman Mobile has to transform itself. They need content managers and partners.

And Omantel needs to get working on their billing and collections system pronto. OIFC, the company that takes care of Omantel's billing and factoring, made RO. 11.2 million in commission just from collecting and factoring Omantel's bill payments. I'm sure the people in Omantel's finance department are thinking "how much it would cost us to do it on our own and do away with OIFC? can't be 10 million a year, that's money for us to keep."

Enough of the mumbo-jumbo, how much will I make?

The shares are priced at RO. 1.28 each. Some people are dreaming that they'll soar to 4 rials. That's not very likely, although it's not impossible. It may go that high based entirely on speculation but the analysis says that's way too optimistic. One thing's for sure, the share is definitely being offered at a discount by the government. Omantel's shares are priced on a 13.2 P/E ratio. In other words if you divide the price per share over the earnings per share, you get 13.2 multiples. In the world of telecoms stocks, this is considered cheap. This is considered a discount because if you look at the P/E ratio for other listed telecom companies in our neighboring countries you'd find that they are all trading at much higher multiples. The UAE's Etisalat was trading last year at as high as 44.1 P/E. Batelco went at 19X, Saudi Telecom 25.7X, Jordan Telecom 30X, and Qtel at 19X.

In 2004, Omantel's earnings per share (EPS) was 0.097. Hence, if the price shoots up to an Etisalat-like multiple of 44X then yes, a price of RO. 4.268 is possible. But if it goes to a more reasonable multiple like Batelco and Qtel it will be just RO. 1.8. If, 2005 expected EPS is 0.099 and the P/E goes to 20, then a price of close to 2 rials is possible. However, most people seem to think that RO. 2.6 is the most likely post-IPO price. That's a 26X P/E ratio and definitely not impossible, especially since National Bank of Oman traded at a P/E greater than 46 last year even though it was making losses. However, most blue chip stocks in in our market are all trading below 20X.

You must also keep in mind that in the first 90 days of trading the share will be restricted to Omanis only. Many people believe that after the 90 day period ends, many Gulf investors will come into the market to buy Omantel shares. Gulf investors have a bigger appetite for higher P/E companies because their own shares are now more expensive. For that we'll have to wait and see. But speculators who believe that GCC investors are willing to pay up to RO. 4 for the share have stated their intention to buy from the market in the 2 rial range during the 90 day restricted period.


It is extremely unlikely that anyone will lose their investment. The minimum expected upside is about 500 baisas a share and that's a more than decent 40% return on your investment. There is potential for even 100% return.

If you invest try to spread your applications in as many names (spouse, kids, siblings, etc if they're not investing themselves). Don't get greedy, and don't sell to quick either.

Postscript: I read in another blog that there's been a fatwa decreeing that the Omantel IPO is not a halal investment. The fatwa is based on the fact that the company places its revenue in bank deposits and earns interest on them. In fact in some years Omantel makes as much as RO. 1 million just from interest. To some this taints the income and makes it haram. If you think this is haram, don't invest. More shares for the rest of us to have.


The Ministry of Oil and Gas insists that the huge hike of almost 50% in the price of diesel was meant to prevent smuggling. Earlier this week the minister of national economy addressed Majlis Al Shura and repeated the same. Furthermore he said that the new price is still lower than international prices.

I was discussing this with some friends who are all in the retail business and they were complaining that there's no way this increase would not be passed on to consumers through a hike in price of all products. I hear that the price of fruits and vegetables immediately increased after the diesel hike. Let's face it, all transport trucks run on diesel. Someone has to pay for the jump, and it won't be the transport companies.

During a dinner conversation a friend asked: how come the fact that diesel was cheap in Oman lead to smuggling across the border but the fact that petrol has always been cheaper in all our neighboring countries never lead to smuggling to this side?

And from today's Times of Oman article about the minister of national economy's Q&A session at Majlis Al Shura:

Shura member Fadhil Al Shikaili: "food stuff and diesel prices have gone up. Will the citizen bear the mistakes of other parties?"

Macki (the minister): "I don't want to talk about diesel."

One final consolation, the minister said that the government will compensate all contractors working on government projects for the price increase.

Monday, June 13, 2005

ESO Lecture June 18

ESO Snake Lecture

Please come and join us for our last lecture before the summer break!

This will be a lecture with a difference – the topic will be Snakes of Oman, and the presenter, Seyad Mohammed Farook, will be bringing some serpentine friends to introduce to you in person! Learn more about these often misunderstood creatures and how to protect them here in Oman.

Date: Saturday, June 18th
Time: Doors open at 7pm. Presentation begins at 7:30pm
Venue: Majan College Darsait (email: for complete directions)

Look forward to seeing you there!

Saturday, June 11, 2005

Slow as mud

I was in the mood today to post a couple of new things here on the blog but the internet connection is acting up today and it's slow as mud. It took a whole minute just to log on blogger and it's been downright impossible to get on my Gmail to read all today's blog comments.

If there was a post today it would have included one or more of the following topics (with the rest to follow during the week) :
  • Omantel IPO that the whole country's going crazy over. There's so much demand that banks are rationing out the application forms to their branches. Half a million forms have been printed but some people are asking for 100 at a time.
  • The royal pardon of all 31 who were convicted last month of plotting to overthrow the government. I wasn't really planning to write about this one, but I guess I should put something about them since I did write so much about the whole situation earlier in the year.
  • Ever had someone you know, or someone you work with suddenly decide to totally ignore like you don't exist? I've been wanting to write about this dude who's been acting like I'm the fucking invisible man for the past 9 months and now the novelty's really wearing off.
  • Downloading music... man, I've downloaded so much illegal shit in the past month. It's more out of necessity since the selection available locally here sucks so much. But still, I've been anti downloading for so long and now I feel like such a fake. Do you think that so long as I buy the albums later on CD whenever they're available, does that make it ok to download? Is there such a thing as "halalization"?
  • Do people who link their Amazon wishlists on their blogs really believe that total strangers are going to be buying them stuff? Does it really happen?

Friday, June 10, 2005

Mr & Mrs.M get some help

Yeps, she is finally here: Our new nanny/housekeeper!

After months and months, the woman has finally arrived. The whole process, as we were told by the agency, should have taken 3 weeks. Trust me, its been much longer than three weeks. But, atleast we are better off than my cousin who has been waiting for six months! Six months! And atleast she arrived before the baby!

Feels weird having our own housekeeper. Like I'm all grown up (as if my protruding belly wasn't enough proof) :)

Errr, since she only arrrived late last night, I don't have any interesting or fascinating stories to share with you. Perhaps within a week I'll have horror stories like the ones my collegues at work so kindly share with me.

(God please please please don't let me have horror stories to share!!!)

Ok thats that from Camp Muscati. Off we go!

Any advice is kindly appreciated!

Monday, June 06, 2005

Must read

It's been a long time since I've last been so engrossed by a novel that I carried it with me everywhere. Shantaram , a massive 932 page novel, is such a book.

It's an incredible autobiographical novel which fictionalizes the author's own experience in Bombay in the 1980's. He was a heroin addict in Australia in the late 70's who committed a string of armed robberies and was sentenced to 20 years jail. He escaped from jail and using a forged New Zealand passport arrived in Bombay where he lived a most extraordinary life for the next ten years. He learned to speak Hindi and Marathi, lived in a village for six months, then lived in a Bombay slum and started a free clinic. He got busted by the police was tortured for three months before getting freed, hooking up with a crime lord and becoming part of the local mafia where he specialized in forged passports and documents. If all that's not enough he became a gun runner, smuggled guns into Afghanistan and took part in the war there for a shortwhile. It all sounds so over the top, and times it is, but it's such a terrific read that you forgive it all its excesses. The characters are vivid and very memorable, and the descriptions of life in Bombay make you yearn to visit it to see it through his eyes.

This is truly one of those once a decade books. The author was eventually caught in Germany in 1990 and was extradicted to Australia to complete his original sentence. He claims he had to rewrite the book three times. The first two times his manuscripts were confiscated and destroyed by his prison wardens. The book came out in 2003 in Australia and became a huge bestseller there. The publishing rights have now been sold in 54 countries and it's now being turned into a movie starring Johnny Depp.

Even more incredibly, the book only covers his story from the time he arrived in Bombay till around 1986 or 87. The author claims there will be 2 or 3 other books in the future to complete his story.

Like I said, the book has some weaknesses but it's well worth your time. It's definitely the fastest thousand pages I've read in a long long time.

update (13.06.04):

The paperback is available at Family Bookshop.

Saturday, June 04, 2005

And you thought soap was just for washing

Wonders of Soap 1


Wonders of Soap 2


Wonders of Soap 4

Breast enlarging.

My showroom is bigger than yours

Ghosn Oman

Nissan’s biggest-ever showroom will be opened right here in Muscat’s upscale Qurum district today by none other than legendary Carlos Ghosn, president and CEO of Nissan Motor Co. Limited. [Link]

Biggest Nissan showroom in the world? Of all the things we could be the biggest in the world in! What a dubious honor.

Wednesday, June 01, 2005

Happy Birthday, Mrs. M.

It's OD's birthday today!

There shall be no divulging here of birthday plans and celebrations (or lack thereof) at the moment.

I'll leave it to the Mrs to tell you how old she is today :)