Qatar's telecommunications sector is becoming increasingly competitive, both domestically and on the international stage.
The recently released Global Competitiveness Report 2009-10, prepared by the World Economic Forum (WEF), ranked Qatar as the most competitive economy in the Middle East and North Africa region, and 22nd overall out of the 133 countries assessed.
The country scored highly in the category of technological readiness, the ability of an economy to adopt existing technologies to enhance productivity. In particular, the WEF cited Qatar's embrace of new communications technology as a factor that enhanced its competitiveness, saying, "The country has made great strides in harnessing the latest technologies, such as mobile telephony and broadband."
Those great strides have seen Qatar ranked second in the world for per-capita mobile phone ownership, 37th for broadband internet subscriptions and 33rd for the total number of internet users.
While the willingness of Qataris to make use of the latest technological advances has helped to improve the country's economic competitiveness at the international level, it is on the domestic stage where things are really heating up.
On March 1, a new era dawned, with Vodafone Qatar launching a limited mobile phone service, thus marking the end of Qtel's monopoly on the market. Full services covering around 99% of the country were launched in July.
Not surprisingly, Vodafone Qatar has experienced some teething problems, partly due to having to share some of Qtel's infrastructure and in part as a result of the unexpectedly high levels of client pick up. In mid-September, Vodafone Qatar announced it passed the 100,000 subscriber mark. Though well ahead of the company's own projections, and a good start towards its target of taking a 40 to 60% market share within 10 years, Vodafone Qatar still has a long way to go before it can truly rival Qtel, which has 1.9m subscribers on its books.
Despite having just a fraction of Qtel's subscriber numbers, Vodafone has set out its stall, seeking to challenge the incumbent with different products and pricing packages. And it is the appeal of the new that is attracting at least some of Qtel's existing customers to its rival, with the two companies basically providing similar services on mobile and internet platforms. Both companies have reduced costs for some mobile phone services and stepped up special offers, including cut-price internet downloads and cheap international calls.
One area that Qtel still retains an advantage in is the fixed-line segment. Though Vodafone is also supposed to provide fixed-line services, a launch date for such an operation has yet to be set, with the company saying in early September it had not as yet been issued the required licence by the Supreme Council of Information and Communication Technology.
Though Vodafone may have to wait before it can mount its challenge to Qtel's landline monopoly, the company has racked up a few impressive achievements in the past few months. The entrant's initial public offering, which was concluded in April, raised $930m, with some 82,000 individual Qatari investors and 273 institutional investors taking a stake in the firm.
While Qtel is responding to the challenge offered by Vodafone, its domestic operations are just part of a much bigger corporate profile, with the company active in 17 separate countries across the Middle East, North Africa and Asia, maintaining a subscriber base of around 52m. The company has declared its objective of becoming one of the world's top-20 telecommunications firms by 2020, an aim it seems on track to achieve.
Despite having raised its debt levels in recent years to fund an ambitious acquisitions programme, Qtel has had little difficulty in rolling this debt over, despite the generally tight liquidity situation. In mid September, it renegotiated a loan of $2bn, arranging a forward start agreement on a revolving credit facility maturing in November, extending the credit by two years.
According to Qtel's chief executive officer, Nasser Marafih, the company is focusing on consolidating three years' worth of growth, though it would always keep watch for any opportunities that would augment its portfolio.
Qtel may be an international firm, but much of its recent expansion has yet to be translated into revenue streams. Till they do, Qtel will rely on its original core market to underpin its operations, though now it will have to contend with a competitive Vodafone on the other end of the line.