Telecoms in Qatar took another step forwards recently with the signing of an agreement that should soon see 3G in the emirate. The deal looks set to place the country amongst the more developed countries for mobile telephony on the Arabian Peninsula, while it also strengthens the regional position of the company coming up with the network - Siemens.
The agreement was signed on July 7 by Qatar Telecom (Qtel) Chairman Sheikh Abdullah bin Mohammad bin Saud Al Thani, and for Siemens by Vice-President Middle East Soenke Peters.
The deal, worth some 20m euros, will see Siemens Communications Group supply and install a Universal Mobile Telecommunications System (UMTS), which will be based on Wideband Code-Division Multiple-Access (W-CDMA) technology. This will include the firm's latest generation of W-CDMA base stations (Node Bs), which can offer theoretical peak data rates of up to 14.4 Mbit/s with the support of High Speed Downlink Packet Access (HSDPA).
This development takes Qtel's GSM/GPRS mobile network to a much higher stage, with fast mobile internet access, live video and audio programming, and the ability to transfer high-resolution digital images and interactive games eventually on offer. The system will be available to more than 120,000 customers.
"The installation of the region's 4th UMTS network is a landmark achievement for Qatar," said Peters at the signing ceremony. "Today [Qtel is] proving once again that Qatar is truly becoming one of the region's most dynamic markets."
Qtel is rather unique among Gulf telecoms operators, in that it has a 15-year monopoly on both fixed-line and GSM operations, due to expire in 2013. Naturally, this does have clear advantages for the company - no costly price wars with competitors, for example - yet has often left market watchers wondering whether such a lack of competition can be healthy.
However, clearly in terms of services, Qtel is not being backwards in coming forwards. Winner of the 2005 Gulf Excellence Award and listed on the Doha Securities Market and on many Gulf Cooperation Council (GCC) exchanges, it has a very positive regional profile. It also has some very healthy financials, with its expansion of GSM services for some time the major profit engine. In 2004, the company posted revenues of QR2.35bn ($645m), up on 2003's end of year total of QR2.03bn ($557m). In the first quarter of 2005, revenue was QR648m ($178m) with an operating profit of QR328m ($90m) and a net profit of around QR253m ($69.5m). All these figures were up on the same periods of the previous year.
The market is, however, small, given Qatar's 750,000 population. But at the same time, given high average income levels and many Qataris' desire to keep with the latest telecoms gadgets, it is very open to technological change.
With this in mind, introducing 3G is understandable. Broadening services is the inevitable next stage of market development, as subscriber numbers near saturation.
The other move is to start expanding into other markets altogether, which Qtel has also been doing in Oman, via Nawras, a joint venture with the Danish telecoms company TDC and several Omani partners.
The 3G contract in Qatar is also evidence of Siemens' expanding regional role.
"Siemens already has a strong position in the GSM/GPRS segment in the Middle East," Christoph Caselitz, president of the Mobile Networks Division at Siemens Communications, told reporters on July 7. "Our strategy is to reflect this in the 3G arena, something we are on a good way to achieving. With Qtel's order, two out of four 3G/W-CDMA contracts in this region have thus far been awarded to Siemens/NEC."
The company is also currently the second-largest mobile provider in the GCC area, with an 18% market share.
Meanwhile, the timing of the Qtel-Siemens deal is also significant, as it is hoped that the new services will be up and running by the time of the Asian Games of 2006, which are being held in Qatar.
"As Qtel is the official telecommunications partner for the games," Nasser Marafih, CEO of Qatar Telecom, told the press at the signing, "we are serious about our commitment and support towards meeting the world-class technological requirements for the games and ensuring that Qtel also plays a major role in organising the best Asian Games ever."
To begin with, the new coverage is expected to cover the capital city, Doha, and its outskirts, but will subsequently be expanded to cover the entire country - giving Qataris a possible glimpse of the track from the screens of their mobile phones. While it is likely such ability will also cost extra, few foresee that as a real obstacle. Instead, it looks like some more good years ahead for Qtel.