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Sun 23 Sep 2007 05:02 PM

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Qatar calling

The decision of ictQATAR to at last liberalise the telecoms market has attracted the interest of prominent network operators. US telco AT&T is one of the more notable suitors to make the regulator's final list of 12 applicants.

The acquisition of a mobile licence in Qatar will require some deft market positioning if it is to remain a viable business investment. With penetration rates in the Gulf state estimated to stand at 130%, in a market of some 840,000 inhabitants, the interest among leading regional and international telcos has intrigued market commentators.

"We were delighted by both the number and quality of the applications we received," commented ictQATAR's secretary general Hessa Al Jaber, on the back of the number of expressions of interest submitted for the second mobile licence on offer." The list includes important regional and international operators. This is a very good start to the process of bringing benefits to consumers through competition."

The first stage of the mobile application process closed in early September, with the ongoing second phase of the qualification process consisting of a technical evaluation followed by an auction among qualified candidates, with ictQATAR expecting to award the second mobile licence by the end of October 2007.

"Qatar has a rapidly growing economy and population with a high demand for all types of communications services," reports William Fagan ictQatar's executive director.

"Although mobile penetration is currently in excess of 100%, this has not been a disincentive for companies to invest in the market - 17 companies applied during the mobile licensing pre-qualification process."

In order to redress the dominance of incumbent operator Qtel, ictQATAR has also issued a Dominance Designation Consultation Paper, with the consultation scheduled for completion by the beginning of October 2007.

Of the 12 remaining short-listed bidders for the licence eight are at partly or wholly- funded by companies outside the Middle East and Africa.

The pre-qualified candidates include: AT&T, ACE consortium (operator Airtel), Argos consortium (operator Verizon), Digicel, QUIC consortium (operators Omantel and Belgacom), Reliance Telecom and Vodafone.

Regional players entered into the final round of qualification include UAE-based Etisalat, MTC, Jordan Telecom and Orascom Telecom.

With such an uphill task facing any new market entrant, market commentators are asking how the potential new entrant will prove a point of difference in Qatar.

AT&T chairman and chief executive Randall Stephenson recently visited Qatar claiming the company would introduce "innovative products and services," and claiming the country posed "a very attractive market for a variety of telecoms products and services".

He said that in markets such as Qatar, it made sense to introduce competition in a balanced and structured way. "In the longer term, our experience shows that markets that have a diversity of competitors and healthy competition are the ones that bring the most innovation and choice for consumers and bring the widest benefits to the local economy," he said.

Geoffrey Webster, AT&T vice president for Global Ventures and Business Development, echoes these sentiments claiming the timing of the invitation could not be more fortuitous.

"We see Qatar as a very dynamic market that offers a valuable opportunity for growth. We are looking towards the Middle East as one of our key markets outside of our US base," he says.

"The opportunity to enter the wireless market in Qatar will give us an opportunity to harness the high levels of growth currently underway in the Middle East telecoms space," he adds.

Stephenson also commented that by offering services, similar to those it offers to its US customers through its wireless business, the acquisition of the mobile licence in Qatar could add value to the company's overall operations.

"We are already the largest provider of mobile services with over 63 million customers and the leading provider of GSM, the de-facto global standard for mobile," said Stephenson.

"In new emerging markets there is rapid growth as communications technology, especially in the mobile area, penetrates the market, bringing with it increased economic activity. Markets such as Qatar, India, China and Brazil are leading the charge," he added.

AT&T claims that the global communications market is one of the most dynamic sectors of the world economy, and its executives highlight the importance of internet protocol technology both for business and consumers.

"In more mature markets you can see the positive effect of increasing penetration of broadband and that is something we hope to bring to this region," says Webster on the critical importance of the market.

"This is a perfect opportunity to utilise AT&T's global strengths to bring innovative communications services to the people of Qatar. I see a strong alignment of interests," commented Stephenson on his recent trip to the region.

Webster claims that AT&T's position as the largest provider of wireless services in the US places it at a distinct advantage in the bidding for the second mobile licence in Qatar.

"We believe that we can leverage the experience from our international operations to add value in such a highly saturated market, as our proprietary technology enables us to offer services that might not necessarily be available in the market."

Although the telco has refrained from drawing up any formal segmentation of the Qatar market at this stage, it alludes to its services available in other markets.

"Right now we are heavily engaged in the bid but you only have to look at the already high rates of usage in both the enterprise and consumer segments to see the potential for an operator that can bring innovative solutions to the Qatar market," discloses Webster.

AT&T officials also highlight the advanced services the company provides in its core North American market, where it presently offers data-centric services such as real-time video sharing services. Stephenson claims this experience will allow AT&T to compete effectively and give Qatar consumers real choice as well as assist in gaining market share in the country.

Company officials also highlight AT&T's other notable product offerings in foreign markets, such as the Apple iPhone, as the telco is the exclusive network distributor of the device in the US. However, they stop short of claiming they will definitely bring Apple's ‘gadget of the year' to the Gulf if successful in the Qatari bid.

AT&T has already established a presence in the Middle East, working particularly closely with Qtel in Qatar by offering IP and data services in the regional enterprise segment since 2005.

AT&T's strategy in the Middle East has centred on facilitating the communication needs of multinational businesses looking to capitalise on the comparatively low trade barriers across the Middle East region.

"Incumbent on us is the ability to service these clients with seamless service and increase the availability of communications in markets where our clients need us to go," reports Webster.

He also notes that the company is seeing rising levels of demand from Middle East based companies that are expanding beyond the regional market through overseas acquisitions. "We are looking to target Middle East headquartered companies with our global value proposition," he says.

The company's core service is providing communications networks for large multinational companies to connect their various offices and locations, enabling them to exchange data-centric services such as email, internet traffic and office applications between multiple sites.

"We are already familiar with the region in terms of how we serve the data and IP needs of our enterprise markets in the fixed line segment of our business," says Webster.

AT&T's MPLS node in Doha is housed in the Qtel data centre, which serves as its base for offering frame relay and IP and VPN services to customers operating in the country and across the wider region, with electronics manufacturer Siemens ranking among its current customers.

Similarly, AT&T has paired with Etisalat to operate a global network node, providing advanced MPLS services, in the regional business hub of Dubai.

The company also scored a major coup in the Middle East market at last year's GULFCOMMS expo when it announced plans to deploy an additional MPLS enabled node in Jeddah, Saudi Arabia, in cooperation with Saudi Telecommunications Company (STC) with the node set to be fully operational by the end of 2007. AT&T claims this agreement will see it interconnecting to the largest MPLS network in the Middle East.

"We also have a couple of other opportunities in this business sector that we'll hopefully be able to announce in the very near future," says Webster.

In addition to the company's presence in the enterprise segment, AT&T also has a 38% share in its joint venture with Qtel, NavLink. In addition, the Qatari incumbent operator has a 38% stake in the company, with the remaining stake held by co-presidents George Chamas and Laurent Delifer, who also hold the posts of CFO and COO respectively.

"This joint venture offers managed services across the Gulf region so we feel that launching ourselves in Qatar is not something that would be entirely new to us," suggests Webster.

"AT&T's bid in the wireless segment of the market is really an extension of our pre-existing knowledge and desire to take market share in an explosive growth market," he adds.

The company has further signalled its designs on the Middle East market by participating in its third consecutive GITEX Technology Week expo in Dubai where it will host a Regional Advisory Council (RAC) for its customers in the region.

Having announced the opening of a new office in Dubai, AT&T hopes to use the event as a forum for extending its network services in the region by demonstrating its key access technologies, such as Wi-Fi, Ethernet, DSL and new wireless options.

With such a strong presence established in the market the company says it is currently scouting for other opportunities to make broader and deeper investments from a network and cable standpoint, says Webster.

"We are looking for any real opportunities to harness the explosive growth opportunities across the region," says Webster, who also highlights the fact that average GDP in the Middle East region is growing at a rate of 5%-6% year-on-year as an indication that now is the right time to extend the telco's regional footprint.

"We believe that this growth is not merely a short term phenomenon and that over the next five years this trend will only continue and we fully intend to both take part in and facilitate in this," Webster concludes.

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