TBY talks to Kyle Whitehill, CEO of Vodafone Qatar, on increased competition in the market, plans to ensure growth, and the company's participation in the economy's diversification process.

What is your overview of the first three years of Vodafone's activities in Qatar and how it managed to break the monopoly of QTel (Ooredoo)?

Telecommunications was one of a number of sectors where the Qatari leadership decided to liberalize and create more competition. What we have noticed in Qatar is a concerted effort to create an industry, where you have the move from a monopoly to a competitive environment. There was a license auction, and Vodafone in partnership with the Qatar Foundation won that license and set up operations in 2009. We are government regulated by ictQatar, under the leadership of Dr. Hessa Sultan al-Jaber. We are really pleased with the way they have gone about creating genuine competition and an environment where operators can really thrive and be successful, while at the same time giving customers a different level of service because of that competition. We currently have 30% of the mobile revenue in the market, which by any industry benchmark is a good performance. Our progress is driven by the environment we are operating in, and it is a well-structured industry. It is also driven by the fact that the population and the overall economy of Qatar are growing considerably, and as a mass market consumer business everybody has a mobile; therefore, we grow with the population.

What makes Vodafone stand out here in Qatar?

We are a very well-known global brand and much of the population of Qatar originates from countries where Vodafone is already very established, and so that gives us a nice starting point. We have been able to come through with a way of serving customers and providing value for money that are significantly different to what customers have experienced here in the past. Because we are part of the Vodafone Group, we are able to offer international products, international calling, and roaming services at a lower cost base, and therefore at a lower cost to the customer than our competitors. Many of our customers are expatriates spending their disposable income calling home, so a low cost is important. We have been improving our network quality, adding international coverage and a high-speed data network, and we have been able to attract higher value customers with our post-paid service, which was launched in 2012. We are now moving into profitability as well, and we are pleased with that. It shows that we have a growing business, but also have a well-structured cost base and profit margin.

“Currently, the telecoms market is worth around about QAR8 billion."

What are your plans to ensure this continued growth?

The good news is that we are very optimistic about the next phase in Qatar. As a country, clearly the population growth as far as we can see will continue, and soon we will pass the 2 million mark; this market is just going to continue to grow. Currently, the telecoms market is worth around about QAR8 billion. The overall sector is going to continue to grow, and the second thing is that because of the competition in the sector, there is no incentive or reason to bring in addition players, in either licenses in mobile or fixed. What we think will happen—as long as it stays like this—is that you have a very fast growing market with a duopoly, where the operators are doing well, and therefore are able to invest in quality and infrastructure, and the customers are happy because they are seeing improvements and declining prices. Furthermore, we are now just launching Vodafone for business to provide services to SMEs, multinationals, and the government. We really do not have any market share in that segment to date, but we will. We are just entering that segment, and very quickly that will be our next phase of growth. Of course, it is where a lot of the engine of growth in the Qatari economy is as well, and so every company that is coming in will consider Vodafone as their service provider. At the same time, we are moving to fixed services, and that is a really important part of our overall story. Vodafone was issued with the second fixed license in 2010, and in the intervening period we have really been building infrastructure to be ready to provide fixed-line services, which is still a monopoly environment. We partner with an organization called Qatar National Broadband Network (QNBN). This is the growth story for us. We will always be best value for money; it is written in the way we operate. At the same time, the customer service that we offer is very different to anything that has existed in Qatar before. We are bringing modern ways of serving customers to take the Qatari service environment forward to one that is friendly and flexible. I do not think that is the norm in Qatar yet, but we are hoping to try and be the role model for that and to drag the whole service industry up to a higher standard. So far, we have been successful and we are being recognized as the customer service leader in Qatar.

Moving forward, how would you evaluate Vodafone's participation in the diversification of Qatar away from oil and gas?

One of the clear pillars of the Qatar National Vision is to be able to provide world-class infrastructure, and telecommunications is clearly a fundamental part of the overall infrastructure of the country. Therefore, not only do we want to contribute to the diversification of Qatar and the delivery of the National Vision, we also have an obligation to do that and we will really have to provide the highest-quality infrastructure that is connected to the whole world. There is no reason why Qatar should not have the best telecommunications infrastructure in the world, bar none. Vodafone Qatar is keen to be a role model within the Vodafone Group to deliver a standard that has not been achieved anywhere else in the world. We think we can achieve that and at the same time, support the overall national vision. It is just about world-class quality and connecting Qatar to the world. Qatarization is also an important issue for us; 18% of our staff are Qatari and that is going up by one percentage point per quarter. We are trying to have a genuinely diverse workforce with a significant proportion that is Qatari, with the aim of transferring our knowledge to the Qataris.

What is your outlook for the telecommunications sector here in the short term?

We are very optimistic about the prospects for Qatar; we do not see any significant clouds on the horizon. We see a very strong economy that has an excellent incentive with the World Cup to move quickly and to get the overall infrastructure of the country moving fast, and that is going to bring people to the country. We see it continuing to grow at a relatively stable rate, yet in a competitive two-player market, with the establishment of a fiber-optic, fixed-line environment that really drives capability and business, and at the moment that does not exist. It is mostly slow copper-based internet stuff, and it can be very frustrating. We are very optimistic, and we see it continuing to grow.

What is your medium-term vision for Vodafone in Qatar?

Our vision is to be the most admired brand in Qatar, in a market where the Q-companies (state-owned entities) tend to have a virtual monopoly. We really want to be the first multinational, mass-market brand to achieve huge levels of admiration from the whole country, particularly from the Qatari population. We set out in the way we operate to be respected and admired, meaning that we think in a way that appreciates the Qatari culture and traditions and focuses on supporting their national goals.

© The Business Year - September 2013