The provision of all telecoms services in the Kingdom of Qatar is currently under the monopoly of asingle operator, Qatar Telecom (Q-Tel). However, in December 2007, the Qatari authorities awardedQatar’s second mobile telephony licence to a consortium comprising Vodafone of the UK and localpartner, the Qatar Foundation. Before its planned launch, which is expected sometime in 2008, the newventure will list a 40% stake in an initial public offering (IPO), and is also required to sell a 15% stake tothe Qatari government.
The launch of services by Qatar’s second mobile operator, in mid-2008, is likely to coincide with theawarding of a licence to offer fixed network services such as fixed-line telephony and internet access, incompetition against incumbent Q-Tel. Qatar’s telecoms regulator, ictQATAR, launched an auction for thecountry’s second fixed-line network operating licence in December 2007. In February 2008, it wasrevealed that a total of eight companies had officially registered their interest in applying for Qatar'ssecond fixed-line licence. The companies are understood to be AT&T of the US, Bahrain’s Batelco, BTof the UK (through a regional subsidiary), Italian alternative telco Eutelia, Jordan Telecom, PCCW ofHong Kong, Verizon of the US and Vodafone of the UK. The fixed-line concession will be awardedthrough a ‘beauty contest,’ with ictQATAR assessing the technical merits of the bids based on the qualityof the network and the range of services proposed by applicants. The licence will cost a fixed fee ofQAR10mn (US$2.75mn), and will allow facilities-based services, including authorisation to operate aninternational gateway. The winning operator is expected to be announced in May 2008.
Qatar’s second fixed-line operator is expected to bring about a radical shake-up in a market wherebroadband connectivity is expensive (and broadband penetration low), and both broadband and fixed-linegrowth is predicted to continue over the next five years. Growth in both sectors will be supported byQatar’s expanding economy and by demand for fixed network services from within the business sector.Meanwhile, although the country’s mobile market is already nearing saturation, with penetration believedto have surpassed 137% by the end of 2007, it is important to remember that Qatar has a large number ofprepaid users, many of which could be relatively inactive. Furthermore, BMI believes that multiple SIMownership is high in Qatar; these mobile market phenomena suggest that there are still opportunities forthe country’s second mobile operator once it comes to market in mid-2008. In addition to winning marketshare from Q-Tel, we also predict strong growth opportunities for the second mobile operator in thecountry’s 3G market. According to figures released by Q-Tel, there were 50,000 regular 3G service usersin Qatar at the end of 2007, equivalent to 4.3% of mobile users. All indications point to strong andsustained demand for mobile internet and data services over the next five years.
Qatar has the second highest score in our latest set of Business Environment Rankings for the MiddleEast. The country benefits from having the highest country structure score in the region, as well as arelatively high score for country risk.
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