Oman Telecommunications (Omantel) has reported a net profit of OMR39.37 million (USD102.53 million) for the six months to 30 June, a drop of 7.4% from OMR42.54 in the same period last year. The fall in net income has been attributed to a 19% rise in operating expenses, which reached OMR86.05 in 1H2005. Revenues in the period grew by 6% year-on-year to OMR127.49 million. The 70% state-owned telco is facing challenges to increase revenues whilst keeping its costs down. Analysts have highlighted the need for the company to increase the volume of international calls by reducing its call rates.