Virgin must exit says Vodafone Qatar
Doha, June 2, 2010
Qatar's telecom regulator should force Virgin Mobile to exit the market or pay damages for allegedly changing the conditions of its $2.1 billion licence in the country, Vodafone Qatar's CEO said.
Vodafone Qatar said last week it would take legal action against regulator ictQATAR for allowing Virgin into the market as a third provider, calling it a breach of Vodafone Qatar's licence agreement.
Virgin signed a partnership deal with Qatar Telecommunications (Qtel) in May, under which Qtel will offer a prepaid mobile service under the Virgin brand.
"Our view is that there is a new service provider in the market. Our shareholders paid 7.7 billion Qatari riyals ($2.1 billion) for a licence that allowed for a period with no extra service providers. That has changed," Vodafone CEO Grahame Maher told Reuters Insider in an interview.
"Therefore we'd like that service provider to leave, or for compensation to be paid," he said. "It's really a question of what is the value of the licence if the terms change."
The regulator has brushed aside Vodafone Qatar's plans to sue, saying only two telecoms providers had licenses to operate in the country: QTel and Vodafone Qatar.
Vodafone won the bid for Qatar's second mobile telephone license in 2007, breaking Qtel's monopoly. The company in May reported a net loss of 673.4 million riyals ($185.1 million) for its 2009-10 fiscal year, but said revenue was 26 percent ahead of plan.
"Revenue-wise we're very happy and ahead of plan. From a profit perspective, we're on plan. We're a new business with a lot of investments," Maher said. "So the $185 million looks like a big headline, but it's actually a good result. And we expect an EBITDA positive in the next couple of months."
But although revenue has been ahead of expectations, margins are still too tight for comfort, Maher said. "We've seen some very aggressive pricing in the market -- some responses that were more aggressive than we expected," Maher said. - Reuters