Economic Update

Qatar: Number portability makes its long-awaited debut

The Middle East | 14 Feb 2013

The introduction of mobile number portability (MNP) in Qatar, a move the industry regulator says will boost competition, may indeed provide a boost for Vodafone Qatar, but with mobile penetration already at 165%, MBP may not be enough to completely level the playing field.

According to a statement issued by ictQATAR on January 10 MNP, which enables customers to keep their mobile phone numbers when they change service providers, will allow customers to change service provider more easily. The regulator said that the move was part of its ongoing efforts to liberalise Qatar’s telecommunications market and increase its competitiveness.

The introduction of MNP has been expected for some time, with ictQATAR having initially announced that subscribers would be able to keep their own numbers when changing operators by the end of 2011. ictQATAR believes that MNP will make the sector more competitive by encouraging operators to reduce rates and offer more competitive packages. However, this already exists in the current marketplace to some degree. Mobile phone penetration rates are currently above 165% in Qatar, making it one of the most saturated markets globally. Vodafone, the sole competitor of Qatar Telecom (Qtel), broke through the 50% market penetration rate in 2012, meaning that most of the population subscribe to both operators.

As a result, a majority of Qataris utilise whichever operators’ services are most cost-effective at a particular time. MNP has not had a significant impact in other regional markets, such as Oman and Saudi Arabia, with little in the way of subscriber turnover.

But any increase in subscribers that MNP may bring will be well received by Vodafone Qatar, which is still recording losses, though it is closing the gap since first launching in 2009. On January 17, the company reported it had seen $23.9m in losses during the last quarter of 2012, compared to the $33.5m recorded during the same period in 2011. The operator also showed improved revenue of $108.7m for the quarter, a $21.9m increase on the same quarter the previous year. This improvement was in part due to a broader subscriber base, with Vodafone Qatar reaching 1m customers at the end of 2012, a 26% increase over the 12-month period.

Meanwhile, Qtel is expanding its holdings abroad, having raised its stake in operator Tunisiana to 90%, after acquiring a further 15% holding from the Tunisian government in early January, to go with the 75% it already held through its Kuwaiti arm Wataniya. Qtel is looking to expand Tunisiana’s reach through the expansion of its 3G services and the fixed-line market in Tunisia.

Qtel is also becoming increasingly active in Iraq. Its subsidiary there, Asiacell, is set to complete a $1.35bn initial public offering (IPO) this month, which will see 25% of the operator’s shares listed on the local exchange. The IPO, a requirement of the licence agreement issued in 2007, is widely expected to see Qtel increase its own stake in Asiacell from its current 53.9% to at least 60%.

At least some of this expansion is being funded through debt. Qtel raised $1bn through 15- and 30-year bonds in an issue that closed on January 24. The company has said it will use the funds for general corporate purposes and refinancing existing debt.

While the Vodafone group recently signed an agreement to continue to manage its Qatari affiliate – in which it holds a 23% stake – until at least 2018, it may take some time for Vodafone Qatar to begin turning a profit, even with any advantages it may accrue from MNP. Meanwhile, despite its accelerated programme of expansion abroad, it is unlikely that Qtel will take its eyes off the ball at home, seeking to maintain its dominant position through new services and upgrades.

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