Qatari Operator Uses Monopoly to Fund Overseas Expansion

Extremely profitable Qatar's Qtel is leveraging its cash flow in regional expansions according to a new report from the Arab Advisors Group. This will be a boon for regional telecom markets and will open opportunities for the monopoly operator outside its home market. Qtel could face GSM competition in Qatar in 2006, the Arab Advisors Group believes. Arab Advisors Group projects cellular subscribers in Qatar to reach 702,000 by end of year 2008, translating into a penetration rate of 87%. This corresponds to a CAGR of 13.3% during the period 2003-2008.

Qatar Telecom (Qtel), Qatar's publicly traded and monopoly telecom operator is the sole provider of fixed, mobile, Internet and Datacomm services in Qatar. Leveraging a very comfortable monopoly in its home market, Qtel is astonishingly profitable: Its net profit margin has reached the 65% mark in 2004! The operator is venturing into Oman in what could be a series of regional expansion moves.

"On August 3, 2004, a separate regulatory authority to govern the telecom sector was established by the Qatari government. The decree number 36 of 2004 was issued for establishing the Supreme Council for Communication and Information Technology, the SCCIT. This committee was envisioned in 1998 as part of the privatization decision. This followed Qatar's joining of the WTO on January 13, 1996 but until now there is no clear-cut strategy or timeline on the full liberalization process of the telecommunication sector in Qatar. To date, Qtel remains responsible for issuing all regulations concerning Qatar's Telecommunication markets." Ms. Muna Sunna, Arab Advisors Research Analyst wrote in the report.

"One of Qtel's important achievements this year was winning the second GSM license in Oman in June 2004, after signing a Memorandum of Understanding with TDC, a major telecom service provider in Europe in March 2004. Qtel and TDC plan to invest US$ 1.7 billion over the first ten years in Oman's telecom market; however, Qtel financial commitment to this project is QR 747,200,000 (US$ 205,274,000). Cellular penetration in Oman stood at 28.9% by end of November 2004, which is the lowest in GCC countries. Commercial Launch of Nawras Telecom is expected in the first quarter of 2005." Ms. Sunna added."

Posted to the site on 8th February 2005