Vodaphone Qatar entry to break monopoly
Vodafone's upcoming launch in Qatar, which will break the GCC's last mobile telephone monopoly, is a cautious step for the British company into largely unknown territory. Since exiting a partnership with Kuwait's MTC (now known as Zain), the company has had only one operation in the Arab world - its hugely successful Egyptian business. "We've always been interested in the Middle East," said Mark Pursey, a spokesman for Vodafone. "Our strategy has been emerging markets. Now Qatar is a pretty unusual emerging market, it is one of the richest countries in the world, but it is the only market of its kind in the region".
Mr Pursey cited Qatar's current mobile monopoly, and a rapidly growing population, as factors that made it such an appealing market for a new entrant. "It is the last monopoly," said Milan Sallaba, a partner at the management consultancy, Oliver Wyman. "There is no other country in the GCC with only one operator. Prices are high, with less customer service and little product innovation. Vodafone have a very well developed range of products that will trigger churn between the operators."
The company has experienced great success in Egypt, where hundreds of thousands of new customers are being added to its network each month. Vodafone Egypt's call centre is now used to service English-speaking customers as far abroad as Australia and New Zealand; it is expected that it will also support the Qatar business. Arab talent from the Egyptian business will play a major role in establishing the Qatar network.
Vodafone has expanded to a number of fast growing emerging markets in recent years, but has largely stayed out of the high-stakes bidding wars for new licences in the Middle East. Instead, the company pushed into India, the world's fastest growing telecommunications market. Early last year, it paid US$11.1 billion (Dh40bn) for a majority stake in Hutch Essar, which has a 23 per cent share of the Indian market.
"There are some very strong competitors in the Middle East," Mr Pursey said. "If we want to compete with them, we want to acquire the right assets at a fair price, and there hasn't been that opportunity very often." Vodafone Qatar, a partnership led by the global Vodafone group and the state-owned Qatar Foundation, paid $2.1bn for the country's second mobile licence. A 45 per cent stake in the company will be offered to investors in September.
Although Qatar's small mobile market has a penetration rate of above 120 per cent, its population is the richest in the world, with a GDP per capita of more than $80,000. The country's population has doubled to 1.4 million since 2004, and some expect it to double again by 2015. Qataris also spend more on their mobiles than anywhere else in the region; Q-tel has reported a monthly average revenue per user (ARPU) of $65, almost 40 per cent more than Etisalat customers.
This ARPU, one of the highest in the world, is largely a product of Q-tel's long-running monopoly, and the entrance of Vodafone is guaranteed to bring down prices. But Vodafone's extensive global experience will also help the company introduce value-added services that are currently unavailable in Qatar. Customers may spend less on calls, but they will also start spending on things never before offered.
"It will be difficult for them to get it wrong in Qatar," Mr Sallaba said. "The regulator is creating a level playing field with number portability, and Q-tel isn't particularly experienced internationally, especially compared to Vodafone." :email@example.com
Published: July 10, 2008 04:00 AM