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Mon 14 Sep 2015 07:59 PM

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Vodafone Qatar targets monthly phone contracts as market slows

Telco has yet to make quarterly net profit since its entry into Qatari market ended Ooredoo's monopoly in 2009

Vodafone Qatar targets monthly phone contracts as market slows
(Getty Images)

Vodafone Qatar aims to sign up more customers on monthly contracts to reduce reliance on less lucrative pay-as-you-go business, as it is squeezed by slowing market growth and stiff competition, its chief executive told Reuters.

The company, an affiliate of Vodafone Group, has yet to make a quarterly net profit since its entry into the Qatari market ended state-controlled Ooredoo's monopoly in 2009.

Its losses had been consistently diminishing, but that trajectory has faltered of late, with its losses increasing in the past three quarters, year-on-year - a trend CEO Kyle Whitehill said was down to a "significant slowdown in the market in terms of growth".

"That is part of the wider Middle East issue around oil and gas pricing," Whitehill said on the sidelines of a conference in Dubai on Monday.

He said pay-as-you-go price cuts by Ooredoo last year, which forced his company to follow suit, had also hit revenue.

Ooredoo, the dominant force in Qatar's two-player market, has upped the pressure there as the performance of some of its foreign units has deteriorated, most notably in Indonesia, Iraq, Kuwait and Tunisia.

To counter these problems, Vodafone Qatar will try to sign up more customers on to monthly contracts, said Whitehill. Such users typically spend more on telecoms services and are less likely to switch provider.

This will "wean us off the dependency on lower value" pay-as-you-go mobile customers, he said.

Of the company's 1.4 million subscribers, just 171,000 were on monthly contracts as of the end of June.

The CEO added he would also seek to bolster its business providing fixed-line services to companies.

The corporate push suffered a blow late last year when a deal to buy state-owned wholesale Internet provider Qatar National Broadband Network (QNBN) fell through under unclear circumstances.

"The reason it didn't go through was because the government had a change of mind right at the end," said Whitehill. He described the decision as a "huge handicap", adding it did not make financial sense for his firm to build a fixed broadband network itself.

Qatar had 3.31 million mobile subscriptions at the end of 2014; mobile penetration is around 146 percent - or 1.46 subscriptions per person.

Vodafone Qatar's subscriber market share was 34 percent as of June 2014, according to the most recently available data in its results.

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