DUBAI (Bloomberg) -- Oman Telecommunications Co. SAOG, the biggest phone operator in the Persian Gulf country, recorded a 49 percent jump in second-quarter profit, helped by lower royalty payments and a decline in costs.

Net income advanced to 36.4 million rials ($95 million) from 24.5 million rials in the year-earlier period, Bloomberg calculated by subtracting first-quarter data from the six-month earnings provided by the company to the Muscat bourse. Revenue rose 14 percent to 102.9 million rials.
“The profit growth appears high because there was a royalty reduction in the second-half of last year,” Sagar Patel, telecommunications analyst at Bank Muscat SAOG, said in a phone interview. “There have been some improvements in margins and a reduction in costs as well,” he added.
Economic growth in Oman, the only Persian Gulf oil exporter that is not an OPEC member, is boosting phone-use and helping telecommunications companies. Oman’s economy will probably expand 5.9 percent in 2008, according to the median estimate of six economists surveyed by Bloomberg News in July.
Oman last year reduced royalties paid by the company, known as Omantel, to 7 percent from 12 percent of mobile telephone revenue and from 10 percent of fixed-line revenue.
Patel, who has a “buy” rating on Omantel with a price target of 2.5 rials, said costs declined 2.4 percent in the second-quarter to 61.4 million rials.
“The revenue increase flows to the bottom-line as there is no additional cost for generating the revenue,” Patel said.
Omantel shares rose 0.5 percent to 2.316 rials in Muscat trading, valuing the company at 1.73 billion rials. The stock has risen 35 percent this year.
In July, Oman’s government invited bids for a 25 percent stake in the company. Oman is looking for investors to help Omantel compete against Emirates Telecommunications Corp. of the United Arab Emirates, and Kuwait’s Zain as they vie for dominance of the Middle East telecommunications market.