Dubai: Oman's Nawras, a subsidiary of Qatar Telecommunication, may raise between $550 million (Dh2.01 billion) and $600 million in its long-awaited initial public offering (IPO), a source familiar with the matter said on Tuesday.

Nawras, which broke the monopoly of state-controlled Omantel in 2006, agreed to float 40 per cent of its capital in February under the condition of its licence but the government granted the company an extension to September.

No fresh equity

The company will offer 260 million shares as it divests 40 per cent of its capital but no fresh equity is being issued to investors, the source said. Nawras has a capital base of 650 million shares.

A price range has not yet been set for the sale.

All founding shareholders of the company, including majority shareholder Qtel will off load their stake through the offering on a pro-rata basis, the source said.

As much as 70 per cent of the offering is open to individual investors, while the remaining part of the issue will be open to institutional investors.

Nawras is projected to earn revenues of 190 million riyals (Dh1.8 billion) for 2010, while net income for the period is expected to come in at 53 million riyals (Dh505 million), an analyst research report on Nawras showed.

Morgan Stanley and Bank Muscat are the managers.

The source said Nawras may seek a valuation for its share sale at a premium to Oman Telecommunications and at a slight discount to Saudi Mobily.

"We are expecting to come at a significant premium to Omantel and a small discount to Mobily, given the superior growth profile, showing EBITDA growth of 34 per cent between 2009 and 2011," the source said.

"This is underpinned by significant dividend potential."

Omantel is trading at 4.6 times its 2011 earnings before interest, tax, depreciation and amortisation (EBITDA), while Mobily is trading at 6.4 times its 2011 EBITDA earnings.

The IPO is expected to launch on September 15 and will be open for a month. The source, who spoke on condition of anonymity, said the shares could list on the Oman bourse by the end of October.

Only two companies were expected to float on the Omani stock market this year, the bourse regulator had said earlier in February.

Minimum requirement

According to the Capital Market Authority (CMA), the Sultanate's regulator, companies planning to go for IPOs in Oman need to float 40 per cent of their share capital as a minimum requirement.

Gulf IPO activity nearly came to a halt in 2009 as a result of the financial crisis with the total value of IPOs in the Middle East and North Africa falling 83 per cent, according to a report by consultancy Ernst and Young.

Activity has been muted in 2010 too with most regions, except Saudi Arabia, seeing no public offerings in the first half.