Qatar calling

Vodafone hopes to bring its global experience to Qatar with the start of mobile operation in 2009.

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By  Roger Field Published  October 15, 2008

Vodafone hopes to bring its global experience to Qatar with the start of mobile operation in 2009.

To some observers, Vodafone's entry to Qatar - a country of some 820,000 people - might seem a step down from some of the company's other enterprises in far bigger countries such as China, India and South Africa.

But despite the country's modest size, CEO Grahame Mahar is excited by the prospect of running Vodafone's first mobile and fixed- line operation in the Middle East, and its first mobile enterprise run in partnership with another organisation.

Countries like Qatar have such a diverse population of people from the UK, Germany, India, Egypt and Africa, so we want to bring all of our learnings to one country that is quite small but has an enormous diversity in population.

"This is our first entry into the Gulf, so this is all new to us and we're excited to be part of the new market dynamic market of the GCC," Maher told CommsMEA.

Qatar's telecoms regulator, ictQATAR awarded the country's second mobile operator license to a consortium made up of Vodafone and Qatar Foundation in December 2007. Vodafone has a 51% controlling stake in the company, and this will be reduced to 23% following an IPO, which is expected to take place in October or November. Mobile operations are expected to start in March 2009. According to Bloomberg, Vodafone and the Qatar Foundation paid 7.72 billion riyals ($2.1 billion) for Qatar's second mobile licence.

In September, the Vodafone consortium won Qatar's second fixed-line telephone licence, which ICTQatar had earlier said would be sold for a fixed fee of some 10 million riyals ($2.8 million).

"It is also the first time we have partnered with the Qatar Foundation, which is in effect one of the country's major funds," Maher says, referring to the mobile operation. "After the IPO we'll own 23% of the business but have full management control. It's an exciting opportunity to be in a new part of the world using a different ownership model."

In terms of the mobile operation, Maher expects Vodafone in Qatar to make similar gains in the market as other second operators, such as du in the UAE, although he is reluctant to give any figures before the company's IPO.

"We would expect to be able to have some sort of success like some of the other number-two players, the same sort of numbers as du in the UAE and have a significant entry into the market place," he says.

"What we will do different is the better question," he adds. "Unlike du we are a large international telecommunications company bringing the whole of our world experience to Qatar. The interesting thing about Vodafone is the diversity of that experience. We have businesses in the UK, Germany, Egypt, South Africa, Kenya, India, China, so we have all sorts of models that we understand around the world.

"Countries like Qatar have such a diverse population of people from the UK, Germany but also India, Egypt and Africa, so we want to bring all of those learnings to one country that is quite small but has an enormous diversity in population."

Vodafone's mobile network is expected to cover close to 90% of the population by March and will eventually cover 98% of the country. "We will be building a network that is as significant as Qtel's and we'll try to make it better. It is a large roll out," Maher says.

"We want to make sure that we develop a network that is high quality, that delivers great coverage across the country and delivers high speed, so people using it for voice and data get great services. Then we want to make sure we connect that network to our global network to provide great global network and pricing."

Qatar's potential

While some analysts questioned the business case for a second operator in Qatar, given the country's relatively small population and high penetration rates, Maher has few concerns.

He is keen to point out that while penetration rates are high in Qatar, they are still not at a level seen in many European countries. It is also difficult to assess the exact mobile penetration rate, partly because many people in the country use two mobile phones.

"We think the penetration rate is about 100% and our best calculation today is about 94%," he says. "The population changes quickly in this part of the world and is also growing dramatically. 100% penetration is high but in world standards it is not really high. I think the Czech Republic, where I was previously based, is on 130%.

Qatar's large expatriate population also helps create churn, as many people only stay in the country for a few years. "There is a bit of natural growth left in Qatar but also the population changes in these countries where people are here on fixed terms for two or three years and then new people come. There is an ever changing population which is quite unusual compared to many other countries. That is an opportunity to get new customers when they arrive."

Furthermore, Qatar only has one existing mobile operator, giving Vodafone Qatar a good opportunity to win new subscribers, as well as potentially winning customers from Qtel. "There is only one operator in Qatar so we still think this situation in Qatar is very good for a second operator to come along and take a share from the existing operator...for people who might want to try something else, and to pick up business as the country continues to grow and finally to pick up as the population turns over and changes," Maher says.

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