QTEL, established to provide telecommunication services to the country, has now outgrown its initial mandate and has
positioned itself as one of the fastest growing telecommunication companies worldwide.

Its first foray outside Qatar was bagging the second mobile operators licence in Oman, in 2004. And in recent months, it has made some critical acquisitions. It acquired an equity stake in NavLink – the MENA region’s leading provider of Managed
Data Services; formed a strategic alliance with Singapore’s ST Telemedia; and the recent 51 percent acquisition
of Kuwait’s Wataniya.

Qtel CEO Dr Nasser Marafih talks to Qatar Today on his company’s 2020 vision and its plans to tackle competition.

|q|Given the size of the market, and the high penetration rates Qtel has already achieved, how successful will a second operator be? Is the market already saturated?

|a|Qtel supports competition; we view it as a healthy environment under which all players – and Qatar – benefit. Growth in the market will happen for various reasons. For example, in addition to Qatar having two mobile licenses holders, we can expect to see continued population growth due to increased and ongoing investment in the country.
The Arab mobile market is very strong at present and we expect to see significant growth in mobile across
the region.
It is also not unusual for penetration to considerably exceed 100 percent as it is common in this part of the world for customers to carry more than one subscription. For example, in the Netherlands, penetration figures are in excess of 150 percent! We also believe that wireless data utilisation still has a long way to grow and hence revenues will increase. Therefore, the market is far from saturated, and Qtel never stops looking for new and exciting opportunities.
It is also worth noting that Qatar is growing at a dynamic rate. Although our penetration of the mobile market
is now over 100 percent, we expect further growth and have made allowances for this in our operational plans. Considering Qatar’s GDP/ capita being the highest in the world, the market still has ample room to grow. Our focus will remain on customers’ satisfaction and the service we provide all of our customers with. This is our priority.

|q|Once there is competition, will it be on price or services?

|a|It is not for us to decide on a new entrant’s strategy, but it is fair to expect our main competition to come on price and we have paid special attention to this area recently. Our prices are in line with regional tariffs and charges, and we regularly benchmark our costs against other operators in the region as we strive to keep ours in “For GSM services, both MENA and Asia will be important. In the case of these regions, penetration is low and there is potential for growth” On A Different Wavelength APRIL 2007 Qatar Today 55 Ringing in a New Era line with these. But of course, this is an area that we have taken into consideration in our marketing plans and strategies, before and after competition arrives.
In terms of services, we have bolstered our provision of high quality services off the back of the Asian Games. Services such as 3G and applications, the recently announced Digital Video Broadband – Handheld (live TV channels directly to special mobile handsets) and Triple Play service (high-speed Internet, voice and IP television over one connection to the home) are second-to-none and put us on firm footing for the arrival of competition.
We will seek to retain our customer base through our exceptionally highquality of products and services and through competitive pricing.
We recognise, too, that whilst retaining our home customer base, we will continue to expand and grow outside of Qatar.

|q|How prepared are you to take on the second operator?

|a|For sometime, we have been preparing ourselves for the day that competition would come into Qatar’s telecoms market. We have been transforming our company internally and re-structuring our organization so that we can get closer to our customers, offer the world’s best products and services, and reasonable prices. Aside from the development of world-class products and services and a commitment to superior customer experience in our Qatar market, the linchpin of our preparations for the day when our local market will further mature and face competition, has been our international growth strategy.
This is the only way we can assure our shareholders’ continued growth at robust returns. Our first strategic investment was in Oman where, in 2004, we won the second mobile operators license and created Nawras, and now have around 31 percent of the Omani mobile market.
In late 2006, Qtel acquired an equity stake in NavLink – the MENA region’s leading provider of Managed Data Services – putting us in partnership with AT&T who also has a 38 percent stake in the venture. Such ventures and other businessto-
business services will allow us to grow our service offering to our corporate customers in our local market and contribute further to Qatar’s effort of becoming a knowledge based economy.
In February this year, we formed a strategic alliance with ST Telemedia giving us an immediate presence in two key markets, Singapore, an advanced market, and Indonesia, the fourth most populous country in the world.
Most significantly, on March 13 we concluded transactions to acquire 51 percent of Kuwait-based, National Mobile Telecommunications Company KSC (Wataniya), a move, which gives us immediate scale in the MENA region as well as significant growth opportunities in North Africa (see box).
Wataniya is a well-respected and successful company with operations in seven countries. With our expeiences in Oman and Qatar, together with the Wataniya group’s skills (as well as that of StarHub and Indosat), we have a powerful and compelling group where our collective almost 12 million customers will feel the bene- fits in terms of products, services and advanced wireless applications.
In addition, our creation of a large, regional group following the acquisition of Wataniya makes us a stronger, more formidable challenge for those coming behind us.

|q|Have you identified countries and regions that you will focus on, for expansion?
|
a|Qtel is continually investigating growth opportunities not only in the Middle East but in other parts of the world too. In general, we will look to make sensible and strategic acquisitions where they occur. However, Asia is a particularly important market for Qtel. Our alliance with ST Telemedia is part of Qtel’s growth strategy, and allows us to establish an immediate
presence in two key markets: Singapore, an advanced market, and Indonesia, the fourth most populous country in the world. We believe that the Asia-Pacific is a high growth region and is one of the main areas we have targeted for our expansion. We are excited about the prospects for growth in the region. In general, and looking to the future, we are focusing on emerging markets, as this is where the growth potential is. Our priority regions are MENA and Asia (South, East and West) as they are the fastest growing regions for telecom services and we have strong cultural affinity to these markets. For GSM services, both MENA and Asia will be important. In the case of these regions, penetration is low and there is potential for growth. For data services, our focus will be in the Middle East, but this is most likely a sector where we will work in partnerships.

|q|How do you compare strategies?A) Entering a market and challenging the incumbent B) Defending a market you have built.

|a|In fact, we are following a twopronged strategy at Qtel. We are preparing for competition in our own market and we are also working on 56 Qatar Today APRIL 2007 Ringing in a New Era operations in an increasing number of foreign markets. We are confident that Qtel will continue to achieve successful growth figures through its enhanced services and customer loyalty programs. Our experience in Oman has provided us with the valuable knowledge and mindset of being a
competitor.

|q|Having been a monopoly for so long, how will you shake off the complacency that may be there at a
sub-conscious level?

|a|We have always been aware that liberalisation of Qatar’s telecommunications market would be introduced in line with international trends. To this end, we had already adopted a competitive ‘mind-set’ that has prepared our organization for the future. This started back in 2002 with the Qturn strategic programme and has continued since then. For several years now, we have urged Qtel people to act and think as though competition is already with us – continually reviewing prices, offering real value-added promotions and providing products and services that are amongst the best in the world.

Growth Driven By Acquisitions

IN THE biggest deal of its kind, Qtel acquired a controlling stake in Wataniya (Kuwait-based National Mobile Telecommunications Company) for a total cash consideration of $3.8 billion.

The 51 percent stake was acquired from Kuwait Projects Company, in a deal that firmly places the Qatari company amongst the top telcos in the MENA region.

It’s still unclear how this will affect branding, management and operations of the Wataniya.

Though some commentators feel that the deal was overpriced, Qtel stresses it isn’t, because of the sheer volume of Wataniya’s footprints in MENA, and its success in Kuwait. For 2006, Wataniya recorded a consolidated net profit of KD73.2 million ($252 million), up 39 percent year on year. Qtel Chairman Sheikh Abdulla bin Mohammed bin Saud Al Thani
said the company’s strategy was to invest in three particular markets – consumer wireless, fixed wireles and managed data services. “The Wataniya deal is clearly in line with the consumer wireless market strategy, meeting our investment criteria and is aligned with our regional growth ambitions.” Wataniya operations are across seven countries (Algeria, Iraq, Saudi Arabia, Tunisia, Palestine, Kuwait and Maldives), whose combined population is 104.4 million. The average (weighted) penetration of cellular services across these countries is 43.4 percent, giving Wataniya scope to make huge inroads in these markets.
As per the report released in February this year, on 2006 figures, the consolidated subscriber base across these countries is 5.9 million. Wataniya holds a licence in Palestine, but is yet to begin operations. At the press conference announcing the Wataniya deal, Dr Marafih said, “We know that from our experiences in Oman and Qatar, together with the Wataniya group’s skills, as well as that of StarHub and Indosat, we have a powerful and compelling group where our collective 12 million customers will feel the benefits in terms of products, services and advanced wireless applications.” For Qtel, in MENA, its challenges are clearly drawn. In Oman, Nawras has to continue to increase market share. In Kuwait, a third entrant is expected. In Algeria, it has to launch a significant drive to increase market share. In Iraq it has to expand its coverage. In Tunisia, it has to improve commercial relationships. But across markets, its main aim is to improve profitability.

|q|Where do you see yourself by the end of the decade?
|a|Qtel has made no secret of its bold vision for the future. By 2020, we expect to be among the top 20 telecommunications companies in the world. We believe we have the right strategy in place and you will see Qtel moving very fast in the coming years – both in our domestic market and in the markets around us. A number of important initiatives were undertaken in 2006 to move us closer to our goal, including the launch of 3G, Triple Play and DVB-H, and our equity partnership with AT&T in NavLink. Now in 2007, we are working on further expansion opportunities in order to make the 2020 vision a reality.
There can be no doubt that the Wataniya acquisition is a major step forward in our regional growth strategy. In addition, we have honed our strategic priorities to better fulfil this vision; our strategy themes for the next two years will continue to be: offering Superior Customer Experience, People and Organizational Excellence, and Sustained Growth, which will provide the foundation and the momentum for our continued progress. Our immediate focus will be to maximise the many investment opportunities in-hand, as well as developing our international growth strategy, and we will continue to strive to provide high quality services and applications for our customers.