BY VANI SARASWATHI

It’s an exciting and vibrant time for the telecommunication sector in Asia, and telecom companies are making a push towards joining the big league. Be it the sub-continent, the Far East or the Middle East.

The buzz is about liberalisation,acquisition, expansion... and for the customer, it’s about cheaper and better deals. In Qatar, this is the last year that a story on the country’s telecommunication sector will equal a story on Qtel. By the end of the year, the much awaited second player would have been licensed. Telecom monopolies are being belled across the region. Qatar lagged behind a few years on this count, mainly because Qtel had its window period as the only provider in the country, and therefore by default, the regulator. Moreover, the World Trade Organization regulations mandate liberalisation, so there was not much of a choice really, but to open up. However, unlike other countries in the region, it is all-out liberalisation in Qatar, as licences are to be issued to own and operate both fixed and mobile telecommunication networks and services to the public. GCC states like Kuwait, Oman, Saudi Arabia opened only the mobile telephony market first.

120% – Bahrain tops
Mobile penetration in
the region

16% – Saudi’s Fixed
Line penetration

20% – Kuwait’s Fixed
Line penetration,
against 90% Mobile
penetration

85% – Oman’s
Mobile penetration
post-liberalisation,
from a meagre 15%
before 2004

14.4% – Fixed Line
penetration in Egypt

57% – Mobile
penetration in Jordan,
against 12.2% in
Fixed Line

(Figures compiled from TRAs and research papers)

Belling the Monopoly

The first official step towards liberalisation was taken last month when the Supreme Council for Information and Communications Technology (ictQATAR), kicked off the consultation process, seeking the views of telecommunications carriers and operators interested in entering the market. This is the first opportunity to do so. Further opportunities to express opinion will arise throughout the licensing process. In the next three months, licensing details are to be published and the licensing process is expected to be completed by the end of 2007.

On the idea behind this call for views, ictQATAR Secretary General Dr Hessa Al Jaber said, “We welcome the opportunity to hear from those operators interested in entering our recently opened telecommunications industry. These meetings are part of our commitment to transparency and fairness to all players.” The license structure and award process are being developed according
to legislation issued in November, 2006 by the Emir of the State of Qatar, His Highness Sheikh Hamad Bin Khalifa Al-Thani. The goal is to drive economic growth and increase efficiency in business practices while delivering benefits to consumers through lower prices, new innovative products and quality of services.

In November last year, an Emiree decree ended Qtel’s monopoly in the sector.

The Emir, HH Sheikh Hamad bin Khalifa Al Thani, issued Law No 34 of 2006 restructuring the administration of information and communication system in the country and lifting the monopoly of Qtel in this sector.

In brief, the law deprives (Article4) Qtel of all the powers and privileges given to it under Law No 21 of 1998. Those powers and privileges are now vested with the Supreme
Council of Information and Communication Technology (ictQATAR), the supervisory body controlling the
sector.

However, Qtel will continue to pay annual charges stipulated in Article 4 of Law No 2I of 1998 and provide
services mentioned in the law. The law also provides for establishment of more communication service providers
in the country. ictQatar is now vested with the authority to issue, amend, cancel or renew all individual licences related to the field. It is also responsible for adopting and implementing a comprehensive national plan in this
sector.

Saturation Point?
What remains to be seen is how much the customer really benefits, and how attractive the market is to operators. Especially since Qatar is a small market compared to rest of Middle East and North Africa (MENA) and Qtel’s mobile telephony penetration is over a 100 percent.Even price-wise, only Kuwait’s Wataniya (now part owned by Qtel) and UAE’s Etisalat, offer a signifi-cantly less cost-structure, than Qtel. So the advantages for the customer will lie in better services and marginally less pricing. With Qtel investing over $3 billion in infrastructure over the last few years, a new operator will have a tough task in hand. On the other hand, for Qtel, any growth it can expect in this market can only be incremental – which further validates its aggressive push outside the country.

On The Fast Track Tuned into the changes, regional telcos (many of which are part-owned by the State) are trying to be a step ahead. Unlike in the past, when monopolies turned out to be white elephants,companies now are thinking big. They are using the monopoly-afforded privileges as a launching pad, instead of complacency couch. Kuwait telcos, for instance, are known for their dynamic growth plans, competencies and expansions. But overshadowing every other player in the MENA region, Qtel is on a spree of acquisitions, attempting to become one among the top 20 telcos worldwide. “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. And by the end of the decade we hope to be well on the way to reaching our goal,” says Dr Nasser Marafih, CEO, Qtel. The first step in this direction was when the Qtel consortium, Nawras, grabbed the Omani licence to provide mobile telephony services in 2004.

In late 2006, Qtel also took a 38 percent equity interest in NavLink (approximate value – $27.5 million). In February, it acquired 25 percent (for $625 million) of the voting shares of Asia Mobile Holding (AMH), in partnership with Singapore-based ST Telemedia. AMH holds controlling stakes in two multi-service operators: StarHub in Singapore (2 million subscribers) and PT Indosat in Indonesia (14 million subscribers). It’s also competing in the Saudi bid, and was eyeing stakes in India’s Hutchison Essar. A Regional Trend A report brought out by the Jordanbased Arab Advisors Group last year, said that with the advent of new operators and increased competition in 2005, subscribers for 39 examined cellular operators in 18 Arab countries reached 84,844,000. Bahrain recorded the highest cellular penetration rate in 2005, which stood at 105.8 percent followed by UAE, 99 percent, which has since gone well over a hundred. UAE and Bahrain also had the highest fixed line penetration rates in 2005, which stood at 27 percent and 26.6 percent, respectively. The simple average for the operators’ ARPU was $26 in 2005 for cellular services, compared to a fixed line ARPU of $45.7. Qatar’s Qtel recorded the highest ARPU for both fixed and cellular services in 2005.

The report stated that the Arab cellular markets are growing at a highpace, while the fixed line markets are stagnating. In 2005, cellular operators added around 34 million subscribers while all the fixed line operators added a mere 2.4 million mainlines. Telecom Egypt added the highest number of mainlines in 2005, which stood at 900,000. The Arab States are all continuing with the liberalisation, as incumbents are trying to consolidate their positions.