We’re just over half way through 2013, but already it’s been a significant year for Qatar’s telecoms industry.
From Qtel’s rebrand to the introduction of mobile number portability and the launch of 4G services, there have been several milestones in the evolution of the country’s mobile and fixed sectors, particularly when set against the backdrop of Qatar being the last country in the GCC to open up to competition when, in 2009, Vodafone Qatar became the country’s second telecom operator.
Since then, Vodafone has rapidly gained a share of the mobile market (as of March this year it had 1,084,000 mobile customers) and the overall subscriber numbers in Qatar have swelled accordingly; there are now around 2.56 million active mobile subscribers in Qatar, which gives a penetration rate of around 140%, according to the latest figures released by the country’s regulator ICTQatar.
Despite the high mobile penetration, both telcos are optimistic that there remains plenty of room for growth. The number of people living in the country has been growing steadily; at the end of last year, there were around 1.8 million inhabitants and Global Investment House analyst Umar Faruqui estimates that subscriber growth will keep pace with an anticipated rise in population of around 3.7%, with the number of mobile subscribers in Qatar expected to hit 4.1m by 2022.
During the first quarter of the year, Ooredoo - the new name for Qtel, which was rebranded in March - saw revenue grow by 4.9% to QR1.6 billion ($439m) compared to QR1.5 billion during the same period last year. Its customer base grew to 2.7 million (2.23 million of which were mobile subscribers), compared to 2.4 million last year. Year-on-year, average revenue per user dropped for post-paid and prepaid users, from QR465 and QR99 respectively to QR407 and QR84.
“We believe that this market is still growing and developing,” says Ooredoo chief operating officer Waleed Al Sayed. “We’ve continued to roll out new and enhanced products and services and have seen strong take-up on the Ooredoo fibre optic broadband network and our 4G Long Term Evolution (LTE) mobile broadband network.”
Vodafone Qatar’s last set of results showed year-on-year revenue increase of 20%, while mobile ARPU increased by 8.4% year-on-year to QR121. The telco posted a loss of QR 25m for the nine months to 31 December 2012, up 56% compared to the same period last year.
Vodafone attributes its growth to two factors: rising subscriber numbers, which is due to an influx of foreign workers boosting its prepaid subs together with a nascent share of the post-paid market, which it entered a year ago. “That has been a significant driver of growth,” says Vodafone Qatar director of marketing Cindy Moussa. “They are high-end customers and are disproportionate in terms of revenue. The second factor, Moussa says, is an acceleration of data revenue, which she says has been a “significant” driver of growth.
Indeed, it is in the mobile market where most of Qatar’s future broadband growth will occur, according to analysts at BuddeComm, who say that “mobile broadband will be the main source of future subscriber growth in Qatar’s broadband market”. It estimates that, at best, there will be 99% penetration by 2020, with the worst case scenario providing for 83% penetration.
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Ooredoo is attempting to slake Qatari mobile users’ thirst for mobile data through its LTE network, which launched in mid-April and now extends to 200 sites across the country. In order to access 4G, Ooredoo customers need 4G-enabled devices that are compatible with 800 MHz and 2600 MHz frequencies as well as a subscription to the Shahry Unlimited Mobile Broadband Plan. Ooredoo has pledged to stock more 4G devices and launch more data plans and services “in the near future”. “The move into 4G enables us to reach a young, high-end range of customers and increase the level of support we provide them,” says Al Sayed.
Vodafone Qatar has yet to launch a 4G service, but it has been working with its 2G and 3G technology provider Alcatel Lucent on a series of internal 4G trials with a view to launching next year. The on-going trial has shown a “seamless” handover between voice and data, Moussa says.
Delta Partners associate partner Luis Cirne says Qatar’s approach to the launch of LTE is “somewhere in the middle” of GCC countries’ roll out of 4G. He says: “Saudi Arabia and the UAE stand out as countries where operators have aggressively deployed LTE networks, while Kuwait, Oman and Bahrain are now going through that process. Qatar is somewhere in the middle of the pack, but is in the process of closing the gap to the front runners quite quickly. The fact that the population is very concentrated and that operators are bullish about the technology helps the matter substantially.”
Cirne says that Qatar has an “added advantage” because of the work of the regulator. ICTQatar has allocated spectrum in the 800 and 2600 MHz bands, which he says is more promising in terms of the ecosystem of mobile devices that will work on those frequencies. Another advantage of making sufficient spectrum available is that it forces operators to upgrade their fixed line value proposition or risk severe fixed-mobile substitution from fast broadband mobile services. “If there is sufficient spectrum available, integrated operators such as Ooredoo and Vodafone will need high speed broadband offers on their fixed lines, or risk having their fixed line subscriber base switch to LTE,” he says.
The Qatar National Broadband Network, known as Q.NBN, was set up to provide a layer of infrastructure for both operators to operate a fibre optic network. Q.NBN, which has a 25-year licence and was funded by the government, aims was to have connected 30,000 homes by the end of 2012. On fixed the side, Vodafone relies on Q.NBN for access, which it has used for its Barwa City roll out to around 50 tower blocks. Vodafone is also working with Q.NBN to gain access to Qatar’s central business district, which it expects to happen around August this year as QNBN works towards its aim of providing 95% coverage of the country.
Indeed, enterprise is an area which Vodafone and Ooredoo are both keen to develop. “There is competition in consumer, and the future has to come from competition in enterprise across fixed and mobile,” says Moussa. “Business solutions have often meant consumer solutions with some tweaking – they are not really built for business. We are working on how we take Vodafone products and services which exist at operations overseas, such as the One Net solution (an IP-based platform managed by Vodafone that provides a single mobile and landline system) and how we bring those to market. The key factors are showing customers they can make savings and providing a network people can rely on.”
Mobile number portability launched in February, allowing customers of Ooredoo and Vodafone to switch providers and keep their mobile numbers. Ooredoo claims that of the customers that have so far ported to its network, “many have been prepaid customers who have chosen to upgrade to our leading Shahry postpaid plans”. Vodafone’s Cindy Moussa says although MNP is important the impact on overall subscriber numbers has so far been minimal. “In this market, people pay immense amounts of money to select a particular set of numbers, so the ability to move that number is very important,” says Moussa. “[When MNP is introduced] there is always high initial burst of movement, but that soon dies down to small volumes. Strategically it is important, but from an absolute numbers the impact is really small.”