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Vodafone cries foul as Virgin enters Qatar’s telecom market

Vodafone cries foul as Virgin enters Qatar’s telecom market

Virgin and Qtel are in an argument with Vodafone over what the latter says is a $2 billion free pass for Virgin to enter Qatar’s telecom market.

May 28, 2010 3:16 by

“There’s a lot of fuss in Qatar in telecoms,” my editor told me. Yeah, you could say that. Here’s the background: Qatar’s monopoly phone provider, Qtel lost its lucrative hold on the market when Britain’s Vodafone in 2007 received its mobile license at a reported cost of more than $2 billion. Vodafone became Qtel’s only market competitor in Qatar last year when they hit the ground running in October. Vodafone netted a “buy” recommendation from analysts early on, reporting a subscriber base of more than 300,000 by the close of 2009 and around 18 percent market share – beating expectations for the entire first full fiscal year.

Round two: Virgin Mobile Qatar launched on Thursday a prepaid mobile phone service within Qtel’s network. The partnership is being characterized as a “brand licensing agreement” that features the Virgin brand and Qtel’s network.

“The market in Qatar was too small to consider building our own network,” Branson told Reuters, “ But this is the start of hopefully a much larger relationship with Qtel, possibly in other countries,” he said.

But considering the $2 billion membership fee that Vodafone just coughed up, this whole ‘brand licensing agreement’ sounds like a bit of double talk for what might really be a small matter of divide and conquer. Not unlike the third party candidate that diverts crucial votes from the big contenders, diluting the playing field, Vodafone is crying foul. Not the least of their complaints is Virgin’s apparent “free pass” on the licensing fee.

At issue is what exactly is constituted by Virgin’s “brand licensing agreement.” Vodafone seems to think they’re an unlicensed service provider. But, Qtel doesn’t think so, and, perhaps more importantly, neither does Qatar’s telecom regulator, ictQATAR

In a statement reported by local media, the regulatory authority said “there is not a third telecommunications service provider licensed to provide fixed or mobile networks and services” in Qatar.

“Recent media reports of a third mobile operator launching services in Qatar are not accurate,”

The regulator adds that it “does not object to licensed telecommunications operators using innovative practices to provide different products and services to the public.” ictQATAR seems to suggest that the brand licensing agreement between Qtel and Virgin is more a marketing strategy to diversify service than any secret plan to launch a third competitor for free.

Round three? Litigious talk is in the air. Vodafone’s CEO contends a breach of the agreement the company entered when they paid their 2 billion initiation fee. “We are taking legal action for the damages this has caused our shareholders. We are simply protecting their interests; 82,000 of which are individual Qataris,” Sheikh Abdulrahman bin Saud al-Thani, Vodafone Qatar’s chairman, said.

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  1. zouzozu on May 29, 2010 11:09 am

    Usual Qatar politics and economics. Ususal Gulf business deals. Too bad for vodafone

  2. Norman Rogers on June 1, 2010 11:54 am

    Vodafone should stand up to the Qatar regulator and do whatever it can to win if this comes down to a legal challenge. Private enterprise can always kick the rear end of a state-sanctioned monopoly. People want telecom services as cheap as possible and as reliable as anything. If Vodafone focuses on cutting costs and giving people what they want, the backlash against the government might save their current business model.


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