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Wed 3 Jan 2007 04:00 AM

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On the Brink

Basking in the afterglow of having successfully executed its role of being the communications provider for the largest sporting event to be hosted in the Middle East, Qtel’s top management are now turning their minds to strategic manoeuvrings that are set to start in 2007 and see the telco become one of 20 largest telecoms providers in the world by 2020.

|~|nasserPicture-1.jpg|~|Nasser Marafih says that Qtel could have won in Egypt had the company chosen to, but creation of shareholder value is a guiding principle within the telco so it resisted over-paying. |~|The winds of change are blowing through the telecoms sector in Qatar, with the national regulator, ictQatar having last year announced that a programme to break the monopoly of sole telecoms provider Qatar Telecom (Qtel) would be undertaken starting this year. Nasser Marafih, Qtel’s long serving CEO is undaunted by the prospect of sharing the market with new players.

“We have been preparing for the entry of competition for over four years,” Marafih asserts. “We launched a programme within Qtel called Q-Turn in 2002 that is aimed at improving our service offerings across mobile, data and fixed products,” he adds.

Marafih has good reason to be confident of his company’s long-term prospects even in the face of competition. Mobile penetration in Qatar already stands at over 100%, and broadband penetration is amongst the highest in the region, representing 30% of all households with an internet connection. The 15th Asian Games, which were held in Doha from beginning of December also offered Qtel to invest in some state of the art communications systems in its role as the Games’ communications provider. Marafih estimates that QAR500 million (US$137 million) was invested in improving Qtel’s telecommunications infrastructure ahead of the Games, much of it on the deployment of a 3G network.

“It was important for us to meet the requirements and exceed them,” says Marafih. Telecommunications is a critical part of any event and it was an essential part of organising the Games,” he added. Qtel spared no expense in rolling extending its offerings to include a TETRA network, which was constructed nationwide and is the largest network of its kind in the region. The operator also deployed WiFi solutions across the city of Doha and added WiMAX connectivity. Improvements to indoor coverage were made and a dedicated portal, accessible on mobile phones, was created for the Games.

Marafih insists that while much of the network improvement programme was meant to meet the needs during the Games, each investment that has been with respect to supporting the Games has value beyond the event. The operator’s 3G network, for example is an asset that Marafih and Qtel’s executive director of wireless services Sheikh Fahad Bin Jassin Al-Thani believe will drive much value creation in Qatar’s telecoms sector.

“We came to market with a unique launch strategy for 3G,” explains Al-Thani. “We came along as part of the second wave of operators in the region to launch 3G, which has given us extra capacity for voice as well as for value added services,” he adds.

As opposed to making access to 3G a niche proposition, Qtel has been working hard to develop it as a mass market offering, having given its subscriber base access to the 3G network without even having to change their SIM cards. “There was no need for USIM cards. All a subscriber required was a 3G handset, and they could become a 3G subscriber,” Al-Thani states.
||**|||~|3gPicture-2.jpg|~|Sheikh Fahad Bin Jassin Al-Thani, head of Qtel’s wireless business estimates that 25% of all Qtel’s traffic is going over its 3G network. |~|The positive effect of this 3G strategy is self-evident. Qtel was reported to be the most loaded 3G network in the world on a per-subscriber basis even ahead of the beginning of the Asian Games. As much as 25% of the operator’s total traffic was going over its 3G network, a figure unheard of even in parts of the world where 3G was introduced many years ahead of places such as Qatar.

Like most incumbents facing the looming threat of competition Qtel is actively reviewing its relationship with subscribers and looking at ways to better serve their requirements. Al-Thani is enthusiastic about the operator’s identification of the youth market as one that holds great potential for the trial and consumption of Qtel’s growing value added services portfolio. “Entertainment is key,” states Al-Thani. “We spent more than a year and a half working on an entertainment platform that was announced in March, and it was a complex project.”

Non voice services already account for around 12% of Qtel’s overall service revenues, and Al-Thani sees potential to grow this even further in the years to come. For 2007 at least, he sees himself focusing on customer experience improvement, with an emphasis on the need to treat customers differently to the way the operator may have done in the past. “A few years back we were a technically driven organisation, but now we are market-oriented,” Al-Thani suggests. “We are not always the first mover in the region, but we are always at the top,” he adds.

In 2007, CEO Marafih will be concerning himself with matters beyond the borders of Qatar. One of his driving ambitions is to see Qtel emerge as one the largest 20 telecoms companies in the world by 2020. “We have been looking at opportunities – both new licences as well as existing companies in the region, and we are currently evaluating a number of investments,” Marafih says. Details of some of these developments are set to become known in 2007.“We are most interested in opportunities in the Middle East and North Africa region, as well as parts of Asia.”

Qtel’s desire to break into major telecoms markets was made clear by its determined participation in the process to award the third GSM licence in Egypt, which was eventually won by the UAE’s Etisalat, with a second-highest bid placed by MTC Group, followed by Qtel. Marafih emphasises that the creation of shareholder wealth is important to the management and board of Qtel, and that this was one of the main reasons it chose not to bid even more aggressively than it had done in the Egyptian licensing process. “If we had really wanted to, we could have won in Egypt,” Marafih asserts. He describes his priorities going forward as driving Qtel’s expansion into the region, a strengthening of its position domestically, and a consolidation of its operation in Oman, currently its only investment outside of Qatar.

Marafih believes that Qtel’s experience in Oman, where it has a controlling interest in second-placed GSM operator Nawras has benefited Qtel in two ways. First it has given the Qatar operator experience in operating in a foreign market, and second it has offered the Qatari monopoly an opportunity to learn more about the strategies implemented by a new entrant in a market, ahead of the entry of such competition in its domestic market.

“We crossed the 500,00 subscriber mark in Oman, which represents a market share of 30%. This experience gives us good perspective as a competitor, and will prepare us for the entry of competition in Qatar,” Marafih suggests. “Competition helps to improve the service offerings of all the players in the market, and we are looking forward to the entry of competition and are willing to support that development.”

Marafih says that Qtel will also be focusing on a data strategy, which has seen it acquire, together with AT&T of the US, a 38% stake in Navlink, a managed service provider company that delivers internet technology solutions.
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