Qatar - change

Qatar's telecommunications industry in the midst of a shake-up

Doha - Qatar's telecommunications industry is in the midst of a shake-up, with domestic operator Qatar Telecom's response to the opening up of its home market has been an aggressive campaign of overseas expansion to broaden its operational and revenue base. Besides acquiring a 51 percent stake in Kuwait's National Mobile Telecommunications Company (Wataniya) for $3.8bn in March 2007, it has established its presence in Algeria, Tunisia, Saudi Arabia and Iraq.

The company now operates in 16 countries across the Middle East and North Africa (MENA) region and Asia, and has declared its ambition of becoming one of the world's top 20 telecommunications firms by 2020.

Qatar Telecom is also expanding into the Indonesian market, though its penetration may not be as strong as it would like it to be. Having gained a 40.8 percent stake in Indonesian operator PT Indosat in June, paying Asia Mobile Holding $1.8bn, the Qatari firm could be thwarted in its bid to take a controlling interest.

Indonesian law stipulates that a foreign company may not own more than 49 percent of a landline operator, though this is capped at 65 percent for mobile phone network providers. With Indosat having both fixed and mobile services, QtelQtel
Qatar Telecom may have to be satisfied with being the largest shareholder in the company, rather than having a controlling interest, according to an Oxford Business Group newsletter.

On July 21, Indonesia's capital market and financial institution supervisory board confirmed that Qatar Telecom would be allowed to acquire no more than 49 percent of Indosat, meaning that it may buy no more than an additional 8.2 percent stake.

It has been suggested that Qatar Telecom could up its stake in Indosat by teaming up with a local partner, though such a move could incur the scrutiny of Indonesian regulatory authorities.

Qatar Telecom may also be looking to increase its footprint across the Indian sub-continent, with reports it has expressed interest in taking up a 26 percent share in India's new mobile phone operator, Unitech. The company, which was granted an operating licence in January, is seeking a partner to provide both expertise and cash for its start-up operation.

At the end of June this year, Qatar's telecommunications regulator, ictQatar, formally awarded the country's second mobile phone licence to Vodafone and its partner, the Qatar Foundation Consortium. In December 2007, Vodafone Qatar won a $2.12bn tender for the second licence and has set March 1, 2009, as its operational launch date.

Handing over the licence to Grahame Maher, the CEO of Vodafone Qatar, ictQatar Secretary General Hessa Al Jaber said competition in the domestic market would result in improved services and products. He also flagged the possibility of a further opening up of the sector, saying that a market review to be conducted in 2010 would determine if there would be any benefit to be derived from issuing one or more additional licences.

Vodafone Qatar has announced it will hold an initial public offering for 40 percent of its shares before November 30. Part of the funds generated will be used to pay for the company's operational infrastructure. Moreover, negotiations over an infrastructure sharing agreement with Qatar Telecom are expected to allow the company to achieve nationwide coverage when it launches services.