Qatar Telecom told to close Virgin Mobile branded business

Qatar Telecom is hurt by a ruling by the country's telco regulator to shut the Virgin mobile branded service by August 4.

Qatar Telecom (Qtel) is finally going to shut its Virgin Mobile branded business, a year after a complaint was made by the company's rival, Vodafone Qatar.

The country's telecommunications regulator, ictQatar, on Monday instructed Qtel to "transfer all existing customers currently on its Qtel's Virgin Mobile Service (QVMS) to a similar Qtel service or provide a full cash refund for the value of their QVMS SIM card and any credit balance they have in their account", according to a statement on the regulator's website.

Qtel responded that it intended to "fully comply" with the ruling and said it would deactivate Virgin Mobile branded SIM cards by the August 4 deadline.

The decision has angered subscribers. Only a year ago, the regulator said the Virgin business was considered legal.

Shares of Qtel increased 1.4 per cent to 150 Qatari rials yesterday. Vodafone advanced 4 per cent to 7.96 rials.

Vodafone Qatar had challenged the legality of the Virgin service, saying it was like a third operator and should therefore not be treated merely as a branded service.

In its first ruling on the spat last July, ictQatar sided with Qtel and analysts said the company would feel the effects of the reversal.

"It's a negative for Qtel and a positive for Vodafone," said Martin Mabbutt, an analyst at Nomura in London. "The Virgin business was aimed at targeting low-end customers, the same ones that Vodafone is going after." Mr Mabbutt said Qtel remained well-positioned in the upper end of the market because Vodafone Qatar's network, billing systems and customer service needed to improve before the company could attract high-spending business customers.

The regulator last week turned down a claim by Vodafone Qatar accusing Qtel of engaging in anti-competitive pricing of international calls.