Vodafone Consortium Wins Second Qatari Mobile Licence

The Qatari telecoms regulator ictQATAR announced yesterday that the Vodafone and Qatar Foundation Consortium has won the bid for the second mobile licence in Qatar, ending the mobile monopoly Qtel has held in the country for so long. The cost of the licence has not yet been disclosed; however, Dr Hessa Al-Jaber, ictQATAR Secretary-General, said: "This is an important milestone in the liberalisation of the telecommunications market in Qatar. The introduction of competition will benefit the people and economy of Qatar. We congratulate the successful applicant and we thank all those who participated in the process." A formal ceremony at which the licence will be received will be held soon and a full service launch is expected in the latter part of 2008.

In Qatar, Qtel has deployed 3G services such as mobile email, mobile internet and more innovative services including 3G MobileCam, a wireless camera that can be placed in customers’ homes or offices and accessed via 3G video calls initiated by a 3G mobile phone from anywhere and at anytime. Although the operator has built up its network within Qatar, it has also realised that it needs to expand out of its domestic market to continue growth. The operator took over Wataniya earlier in the year (see Kuwait: 5 March 2007: Qtel Wins 51% of Wataniya for US$3.72 bil.), which will enable it to extend its market presence, where Wataniya has established operations in Algeria, Iraq and Tunisia. This heightened market presence has already increased Qtel’s customer base approximately six times.

Vodafone already has a partner network agreement with MTC in Kuwait and Bahrain, which now have been rebranded as Zain. When MTC-Vodafone entered the Bahraini market in December 2003, it also broke the mobile monopoly of the incumbent Batelco and secured a massive 19% market share after one year. Since Batelco's provision of mobile data services in Bahrain, MTC-Vodafone's market share acquisition reached a plateau at about a 25-26% market share in 2005 and 2006.

Outlook and Implications

• Entering a Highly Penetrated Market: Mobile penetration in Qatar is around 120%, which is amongst the higher end of the penetration levels for the Middle East region. Although this may make it tough for Vodafone to enter the market, earlier this year du launched a mobile service in the U.A.E which also broke Etisalat’s mobile monopoly; at the time, mobile penetration was also 120%. Within one year of its launch du acquired 1 million customers, equating to a market share of 15%, while mobile penetration in the country now stands at 170%. du benefited from the country's economic growth and increasing business and tourist users, but also deployed like-for-like mobile services throughout this year to ensure that it maintained competition with Etisalat.
• ARPU Levels: Currently Qtel enjoys ARPU levels of US$65, which is one of the highest levels in the Middle East. As GDP per capita is close to the US$30,000 mark, ARPU levels are not expected to fall significantly. Both operators will compete on innovative services rather than cost, which will lead to greater offerings of choice and innovation to the Qatari mobile market.
• Market Outlook: Although market conditions for Vodafone are not exactly the same as it experienced when it entered as MTC-Vodafone in Kuwait and Bahrain, the country has dynamic economic growth and an increasing number of business users who need the advanced mobile data services, and domestic users who are keen to enjoy the possibilities of the innovative mobile services similar to those enjoyed in the U.A.E and other Gulf Cooperation Council (GCC) countries. Vodafone may not take as big a market share as it did when it broke other monopolies such as in Bahrain with MTC, but a minimum of 10% market within the first year of operations is very likely.