Was Vodafone Qatar scared of Richard Branson?

Virgin Mobile spat does little to enhance Qatar's allure for foreign investors, writes Anil Bhoyrul
Was Vodafone Qatar scared of Richard Branson?
By Anil Bhoyrul
Sun 19 Jun 2011 12:41 PM

About eleven years ago I bumped into Sir Richard Branson at a party in London. He was dressed up as a mobile phone, serving food to his guests.

“What on earth are you doing?” I asked him.

“I am launching what will one day be the biggest thing in our history, Virgin Mobile. Just wait and see,” he replied.

Last May, as Branson sped off the coast of Doha in a jet ski, to promote the launch of Virgin Mobile in Qatar, he was pretty much right. Virgin Mobile has become the fastest growing and most successful business in Virgin’s history, with more than fifteen million customers around the world.

And the launch of its business in Qatar last year was meant to be the first of a growing presence in the Middle East. “It’s something that we have always tried to do, a simple structure that costs less and everyone understands how to use. This part of the world has been very good for our brand, with radio, the shops and telecoms, so we’re looking at many other things we could do,” Branson told this magazine just six months ago.

Not anymore. Last week Qatar’s telecommunications regulator gave Virgin Mobile the boot from Qatar, after ruling that its local partner Qtel had effectively broken the law by tying up with Branson. Customers will find their Virgin Mobile SIM cards deactivated on August 4th.

It’s a sorry tale that does little to enhance Qatar’s drive to attract more foreign investment, while Vodafone Qatar — which filed the initial complaint against Branson the moment he set foot in Doha — has hardly covered itself in glory.

You may wonder why Vodafone Qatar filed its complaint in the first place. Well, maybe it took note of how Branson successfully rolled out his mobile brand in seven other countries, and did a stellar job of targeting the youth market. The pricing structure of prepaid only, simplified all day tariffs (so no distinction between off peak and on peak) has proved a hit in many places. Not to mention the Virgin brand probably has more appeal to youngsters than Vodafone Qatar. There is also the small matter of Vodafone Qatar having turned in a loss for eight consecutive quarters since it launched in 2009.

Personally, I think ditching Virgin Mobile from Qatar is a travesty. The company, its brand and its way of doing business is exactly what the region needs. And the likes of Vodafone Qatar should be welcoming the competition and the challenges it poses them, rather than running to the lawyers at the first sign of trouble. To be fair to Branson, he said last week the experience hasn’t deterred him from doing business elsewhere in the Gulf. Hopefully there will be plenty of takers.

Price plunge

Our awards season is now in full swing, with events in Kuwait and Saudi Arabia in the past two weeks. And the main topic of conversation at both has been Dubai’s property market. When will prices recover? That is the most asked question in the region. And I fear, according to the most recent data, we are still some way off.

Bloomberg reports that Dubai home values declined 1.2 percent in May compared with the previous month and rents fell by one percent. Apartment prices slid 1.3 percent in May, while villas declined one percent.

“Despite talks of renewed interest in real estate following regional unrest, there is no visible sign of an improvement,” analysts Nabil Ahmed and Athmane Benzerroug wrote in a note to investors. “Even if we believe the worst of the downtrend is now behind, new supply, lack of homebuyers’ appetite and anemic transaction activity point to further weakness.”

Back in early 2009, a lot of “experts” said prices would pick up in Q4 2009. Then it was Q4 2010. Then it was Q4 2011. Unfortunately, nobody is now even predicting Q4 2012.

Anil Bhoyrul is the Editorial Director of Arabian Business.

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