Qtel remains bullish as competition looms

But the end of Qtel's monopoly, the last remaining in the telco industry in the Arab world, had been anticipated for some time and now, as Qatar's Supreme Council of Information and Communication Technology goes about the task of drawing up a framework for the issuing of licences, the country's sole operator has been hard at work making sure it is ready for the challenge ahead.

Licences looming

Earlier this week, at a press conference in Doha, ictQatar revealed that licensing procedures should be in place by early next year, after which the regulator would be ready to begin handing out the actual licences. Secretary-General Dr Hessa Al Jaber would not be drawn on a specific timetable but it is thought at least one rival operator could be in position before the end of 2007.

Dr Al Jaber refused to rule out the possibility of separate licences being offered for fixed line services, mobile networks and broadband Internet, but she did scotch rumours that one regional operator had already expressed a strong interest in securing a licence saying, 'We are not looking at names now. Once we issue the licensing procedures, bids will be invited and licenses distributed thereafter.'

But Al Jaber stressed that increased competition in the telecom sector would massively benefit both Qatari consumers and the economy. She felt lower call prices, improved service quality and the generation of jobs would be just some of the key benefits.

Up for the fight

Qtel, of course, might not be so keen on the thought of increased competition but it has been gradually gearing up for the loss of its monopoly and is determined to move forward with an aggressive growth strategy.

Just a few days prior to the passing of the new legislation, Qtel's COO David Murray revealed that the firm was set on major expansion in foreign markets. Although no specific details were given, Murray said Qtel was finalising deals in three Muslim countries for either new licences or acquisitions of existing state-run operators. Communications Middle East and Africa suggested earlier this month that Qtel was particularly interested in Indonesia.

Qtel's drive into foreign markets has so far been limited to its mobile subsidiary in Oman, Nawras, which has now built up a subscriber base of 500,000 and a market share of 27 per cent. An attempt to purchase Egypt's third mobile licence earlier this year drew a blank when the UAE's Etisalat won the tender.

As the threat of competition approaches, Qtel's business looks in good shape with the first nine months of the year producing a net profit of $357.2 million, an increase of 39 per cent over the same period last year. The Qtel group as a whole has now clocked up more than 1.3 million mobile subscribers, a jump of 56.6 per cent.

Possible advantages

Qtel's CEO Nasser Marafih is certainly focusing on the plus points of other operators entering the market. As a monopoly, the company currently has to supply 25 per cent of its net profits to the government as a royalty payment, but this is likely to cease once a rival arrives on the scene. Marafih also pointed out to Reuters recently that any new telco operator will almost certainly need to use Qtel's existing network infrastructure and this too will generate additional revenue.

It is perhaps telling that Bahrain's Securities and Investment Company, in a detailed report on Qatar Telecom, predicted a compounded growth in earnings of 23 per cent up to 2008, despite the probability of imminent domestic competition. If Qtel's future acquisitions also bear fruit, then the loss of its monopoly may make little immediate impact on its prospects.