Last December, Vodafone scored a number of firsts by being awarded a mobile licence in Qatar. Vodafone became the first European operator to win a mobile licence in the Gulf, and the opportunity stands out as the first greenfield investment Vodafone has undertaken since acquiring a licence in Egypt ten years ago. In an exclusive interview, Vodafone Qatar CEO, Grahame Maher explains why this prospect is set to change how Vodafone does business in the region, and how success in Qatar will be exported across the region

Grahame Maher, CEO Vodafone Qatar

Every significant operator in the Gulf had expressed an interest in the second mobile licence in Qatar, and its award to a consortium comprising Vodafone and the Qatar Foundation last December came as something of a surprise to onlookers. Qatar’s telecoms regulator, ictQatar, did not do itself any favours by reviewing the final stages of the bid process behind closed doors and not publicising the amount of the winning consortium’s pledge for some time after the winner was announced.

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As a strategy-led publication, we are often asked to forecast what we believe to be the trends that will dominate the telecoms space in the coming years. It’s a hard question to answer, not least because technology develops at such a pace, but also because experience has shown certain developments that had been predicted to become sure fire successes, failed while others that the industry may not necessarily have intentionally fostered, have gone on to become significant winners.

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As reported exclusively by Comm. on July 27, Emaar, The Economic City (Emaar EC), has confirmed the award of a SAR320 million (US$85 million) strategic agreement to Ericsson to implement and operate the smart city infrastructure and the multi-purpose network for Ethraa, The Smart City. Emaar EC is the company developing the King Abdullah Economic City (KAEC).

KAEC has six key components – the Sea Port, Industrial Zone, Central Business District, Educational Zone, Resort District and Residential Communities

Fahd Al-Rasheed, CEO and board member, Emaar EC awarded the agreement to Bjorn Hemstad, chairman of Ericsson’s Central Europe, Middle East and Africa (CEMA) region, in Jeddah recently. 

Ericsson will design, build and operate the entire telephony, Internet and data plus video broadcasting infrastructure for all investors and residents within KAEC under the supervision of Ethraa, The Smart City. It is expected that operations will start in January 2009 and extend to January 2012. 

Ericsson will undertake an extensive reconciliation and survey of KAEC and custom-develop the smart city infrastructure through a dedicated R&D team. The ICT foundation to be developed by Ericsson will ensure that investors and residents in KAEC will have access to the highest broadband connectivity possible, telephony and multimedia including seamless video connectivity.

With respect to Comm.’s breaking story on July 27, according to one insider involved in the KAEC project, the award of the contract to Ericsson was based purely on technical merit rather than political considerations. “Ericsson provided the best solution, and Emaar went with them. Cisco wasn’t in the running as far as they were concerned. In fact, Huawei was the second choice.”

KAEC, spread over 168 million square metres on the Red Sea coast, is the largest private sector development in the region.

Research conducted by Comm. telecoms publication shows that while revenue growth for operators in the Gulf region remains in double digit figures, net profits are being squeezed significantly, with two operators on Comm.’s list of eight regional service providers actually reporting a fall in profitability between the first half of 2007 and the first half of 2008.

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South African mobile telecoms provider MTN Group today reported interim results for the six months to end-June, recording a 53 per cent growth in subscribers year-on-year to 74.1 million, and revenues of R46.1 billion (US$5.99 billion), up 35 per cent year-on-year.

MTN is Africa’s pre-eminent mobile telecoms provider, but has failed to ratify deals with Indian investors in recent months.

EBITDA for the six months to end-June amounted to R19.6 billion, up 29 per cent year-on-year, with the group taxation charge increasing by R2.4 billion compared to the six months ended June 2007. MTN explained this relates mainly to the ending of pioneer status tax holiday in Nigeria in March 2007 resulting in a tax charge of R2.9 billion for the period under review as compared to R1.0 billion for the period ended June 2007.

MTN’s network spans 21 markets across Africa, the Middle East and the Mediterranean, and performance in its three largest markets was robust The number of MTN South Africa subscribers increased by five per cent to 15.6 million in June 2008 from 14.8 million in December 2007. This was mainly due to strong growth in prepaid subscribers, which grew by six per cent to 13 million and to a lesser extent the four per cent growth in postpaid subscribers to 2.6 million.

Average revenue per user (ARPU) of the prepaid segment remained stable at R92 while postpaid ARPU increased by R9 to R405. The prepaid ARPU performance was positively influenced by the continued success of the low denomination vouchers. Blended ARPU, as a consequence of the movement in postpaid ARPU and increased contribution of prepaid subscribers, showed a decline by R4 to R145 from December 2007.

MTN reported that during the six months additional nodes were introduced to increase capacity on the voice and data core networks of 25 per cent and 30 per cent respectively. SMS capacity was also increased by over 40 per cent.

MTN’s subscriber base in Nigeria increased 12 per cent to 18.6 million subscribers from December 2007. ARPU declined slightly to US$16 from US$17 reported at the end of last year. The operator believes the trend is in line with the increasing competitive environment and the deeper mobile penetration into the market, which is now at 31 per cent. Market share marginally declined to 43 per cent from 44 per cent in December 2007.

Aggressive network roll out continued during the first half of the year and 758 new BTS sites were integrated into the network, with MTN reporting that 494 3G sites are now live. Over1,200 kms of new microwave backbone routes are already in progress and shall be completed by the end of 2008.

In Iran, MTN’s subscriber base grew 93 per cent from December 2007 to 11.6 million users. The aggressive subscriber acquisition rate can mainly be attributed to the ‘buy one get one free’ campaigns, competitive SIM pricing, which lowered upfront cost of ownership, and attractive basic and promotional tariff plans. Market share increased from 23 per cent in December 2007 to 32 per cent at the end of June 2008, while mobile penetration moved up from 37 per cent to 50 per cent over the same period.

Iran’s ARPU declined marginally from US$10 in December 2007 to US$9 for this half-year period as the operation continued to attract low income subscribers, MTN reported.

During the half-year period, 696 new BTS sites were rolled out bringing the total live sites to 2,649. At the end of June 2008, 454 cities had been covered by the network, of which 220 were switched on this year, and a total of 4,027 kms of road coverage has been put on the ground (2,918 kms at December 2007). Population coverage has increased from 50 per cent in December 2007 to 57 per cent in June 2008.

MTN Iran now has seven established dealers of its products with 6,000 registered dealer outlets and 40,000 points of sale countrywide.