The latest update on Qatar’s telecoms market incorporates new operational and financial data for the first two quarters of 2009. According to the country’s incumbent operator Qatar Telecom (Q-Tel), the number of mobile subscribers grew by 14.2% in the first six months of 2009 to surpass 1.9mn. This gives Qatar a mobile penetration rate of just over 131%. The report believes that the mobile market harbours a significant number of multiple SIM card owners and inactive prepaid users. These phenomena have the effect of raising the country’s mobile penetration rate over and above the 100% mark.

One of the most significant developments to have occurred in Qatar’s mobile market in recent weeks was the launch, in July, of full commercial operations by the country’s second national telecoms operator, Vodafone Qatar. The new operator launched commercial mobile services with an online promotion and a promise to add a prepaid product under the ‘Red’ banner to its existing range of ‘Flexi’ postpaid packages. In September, Vodafone Qatar announced that it had reached 99% population coverage, adding that it was confident of capturing 40-60% market share from Q-Tel within 10 years.

The launch of commercial operations by Vodafone is already resulting in increased service innovation and consumer choice. For example, in September 2009, Vodafone Qatar proceeded to launch mobile internet services in the country. However, one negative consequence of the increased competition is likely to be a new downward pressure on mobile ARPU levels. In Q209, Q-Tel reported yet another fall in its mobile ARPU, with the lower spending being driven by prepaid customers. Although Q-Tel postpaid ARPU fared better, it is notable that postpaid customers account for just over 13% of Q-Tel’s total customer base.

With competition now established in Qatar’s mobile market, attention is turning to the fixed-line sector, which remains a monopoly under the control of Q-Tel. Nevertheless, this situation looks set to change, sometime before the end of 2009. In September 2008, Qatar’s regulatory authorities awarded a fixed-line services licence to Vodafone Qatar. In July 2009, media reports suggested that Vodafone was reportedly planning two separate fixed-line infrastructure deployments. Both deployments would form part of the Pearl-Qatar project, a QAR50bn new-build island spanning 4mn km2, due for completion in 2012.

However, although Vodafone Qatar is already preparing for the launch of fixed-line services, it should be cautioned that the country’s telecoms regulator ictQATAR has yet to officially issue Vodafone Qatar with its fixed-line licence.

Other developments in Qatar’s mobile market include the passage, in August 2009, of a new telecoms bylaw, which has been described by the country’s telecoms regulator as an important step in the development of the legal foundation for liberalisation of the telecoms sector. The by-law includes regulatory provisions on a range of subjects, including licensing, radio spectrum management, interconnection and access, tariffs, numbering and competition policy. Also in August, the regulator announced plans to issue three licenses for very small aperture terminals (VSAT). VSAT enables communication links via satellites between geographically dispersed sites. The VSAT licensing process will start with a pre-qualification phase, with those who qualify being eligible to compete for a licence.

This quarter sees a slightly lower overall score for Qatar on the back of a weaker Telecoms Market rating.

The weaker Telecoms Market score reflects the continued downward trend which is currently affecting Q-Tel’s mobile ARPU. Despite this, Qatar remains in fourth position in our latest set of Business Environment Rankings for the region.