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Thu 3 Jun 2010 01:10 AM

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Vodafone Qatar wants Virgin exit or compensation

Vodafone CEO questions value of the licence due to the terms changing.

Vodafone Qatar wants Virgin exit or compensation
CONDITIONS CHANGED: Vodafone Qatars CEO has said that the countrys telecom regulator should force Virgin Mobile to exit the market or pay damages for allegedly changing its license conditions. (Getty Images)

Qatar's telecom regulator should force Virgin Mobile to exit the market or pay damages for allegedly changing the conditions of its $2.1 billion licence in the Gulf Arab state, Vodafone Qatar's CEO said.

Vodafone Qatar said last week it would take legal action against regulator ictQATAR for allowing Virgin into the market as a third provider, calling it a breach of Vodafone Qatar's licence agreement.

Virgin signed a partnership deal with Qatar Telecommunications (Qtel) in May, under which Qtel will offer a prepaid mobile service under the Virgin brand. In an interview with Reuters Insider, Grahame Maher, Vodafone CEO, said: "Our view is that there is a new service provider in the market. Our shareholders paid 7.7 billion Qatari riyals ($2.1 billion) for a licence that allowed for a period with no extra service providers. That has changed."

He added: "Therefore we'd like that service provider to leave, or for compensation to be paid. It's really a question of what is the value of the licence if the terms change."

The regulator has brushed aside Vodafone Qatar's plans to sue, saying only two telecoms providers had licenses to operate in the Gulf Arab state: QTel and Vodafone Qatar.

Vodafone won the bid for Qatar's second mobile telephone license in 2007, breaking Qtel's monopoly in the Gulf Arab state, the world's largest liquefied natural gas exporter.

The company in May reported a net loss of 673.4 million riyals ($185.1 million) for its 2009-10 fiscal year, but said revenue was 26 percent ahead of plan.

Maher said: "Revenue wise we're very happy and ahead of plan. From a profit perspective, we're on plan. We're a new business with a lot of investments."

He added: "So the $185 million looks like a big headline, but it's actually a good result. And we expect an EBITDA positive in the next couple of months."

But although revenue has been ahead of expectations, margins are still too tight for comfort, Maher said.

Maher said: "We've seen some very aggressive pricing in the market - some responses that were more aggressive than we expected."

He added: "Today we have 500,000 customers, about 30 percent of the population, so I think it has been a great year."

He said: "We focused initially on the working customer community. Our focus this year is to finish everything that we have been building, and then approach the other segments, particularly business and the higher-value segment, the Qatari, the long-term Arabic segment."

Vodafone Qatar's shares, which have gained about 8 percent this year, have had a rocky time since being listed at 10 riyals per share in August 2009 and remain below their issue price.

Maher added: "I think what we are seeing now is a stabilization of the shareholders who understand the share and are in it for the long term." (Reuters)

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