Qtel unites under a new global identity; increases control across its footprint

Qtel unites under a new global identity; increases control across its footprint

14 MAR 2013

Qtel’s transformation into ‘Ooredoo’ was a big story at Mobile World Congress this year, says Matt Ablott of Wireless Intelligence but does it represent more than just a rebrand?

Qtel chose a big stage to announce its transformation into ‘Ooredoo’. By unveiling its new global identity at Mobile World Congress, the Qatar-based operator group signalled its intention to be seen as a major mobile player with an internationally-recognised brand.

Speaking at a launch event in Barcelona, group chairman Abdullah Al-Thani said Ooredoo – which translates as ‘I Want’ in Arabic – would become “a single brand to unify the whole Qtel group with a single look and feel.” The new identity, he said, would add “colour and personality” to the brand and reflects “confidence, energy and empathy.”

All operating companies in which the group owns a controlling interest will adopt the Ooredoo moniker over the next two years; its home market of Qatar will be the first to rebrand. This will mean the phasing out of local brands such as Qtel in Qatar, Indosat in Indonesia, Wataniya in Kuwait, Nawras in Oman, Tunisiana in Tunisia, and Nedjma in Algeria.

The fragmented nature of the group’s various brands up until now often serves to mask its size. It is active in 12 markets across the Middle East, North Africa and Southeast Asia – not including its 14.1 percent stake in Singapore’s number-two operator StarHub (which is not affected by the rebrand). In terms of market footprint and number of mobile customers (92.3 million), Ooredoo is significantly larger than rival Middle Eastern groups such as Etisalat of the UAE (53.8 million) and Kuwait’s Zain (35.3 million). According to our latest ranking (Q4 2012), ooredoo is the 24th largest operator group worldwide by mobile connections.

Ooredoo’s monopoly position in its home market was ended in 2007 with the launch of Vodafone Qatar, which topped 1 million mobile connections last quarter. Despite this competition – and despite a mobile penetration rate in the country calculated at over 150% – Ooredoo has managed to grow domestic sales, reporting record annual revenue of $1.7 billion in Qatar in 2012. Mobile ARPU remains above $40.

The resilience of the Qatari market means that even though it only accounts for 2.7% of group mobile customers, it makes up 18.4% of sales (see table). Ooredoo’s subsidiaries in Oman and Kuwait also generate significantly higher revenues relative to their respective size, underlining the fact that – in global terms – the Middle East remains a premium-priced, postpaid mobile region.

At the other end of the spectrum, Indosat in Indonesia accounts for almost two-thirds of group customers but only around a quarter of sales. Indosat’s ARPU in Q4 was just $2.84 with 88% of the mobile base counted as 2G-GSM and 98% prepaid. Recent strategies undertaken by the operator include the launch of a high-end prepaid smartphone brand (“Mentari”); a focus on the SME segment; and the sale and leaseback of its local towers.

The group’s second-largest market is Iraq, where Asiacell surpassed the 10 million mobile connections milestone last quarter. Ooredoo paid $1.47 billion last summer to double its stake in Asiacell ahead of the unit’s IPO (a condition of its licence), which saw 25% of the firm successfully listed on the Iraqi Stock Exchange later in the year, raising $1.27 billion. Ooredoo’s stake in the unit has since increased to 64.1%.

Last year also saw the group lift its stake in Kuwait-based Wataniya Telecom, which oversees the units in Algeria, Tunisia, Kuwait, Palestine, the Maldives and Saudi Arabia. The company paid $1.8 billion in October 2012 to increase its stake in Wataniya from 52.5% to 92.1% (it had paid $3.8 billion for an initial 51% stake back in 2007). It subsequently paid another $360 million to acquire a separate 15% stake in Tunisiana from the local government, lifting its effective shareholding in the Tunisian mobile market leader to 90% (75% via Wataniya).

These investments reflect a long-standing strategy by the group to strengthen management control over its controlled subsidiaries, a pre-requisite for rolling-out a single brand and culture across a disparate global footprint. The group has also talked about combining “resources and assets” across the global business, likely to include leveraging economies of scale in areas such as procurement.

But with a market footprint split between mature and developing economies, spread across many different geographies, Ooredoo’s service offerings will need to continue to reflect local market demand.

At a group level, Ooredoo reported a 13% increase in full-year net profit last year (to $808 million) as annual sales grew 6% to $9.3 billion. It claims to be the world’s fastest-growing telco in terms of sales since 2006.

Its solid financial position, alongside its global ambitions and sovereign wealth backing, inevitably sees Ooredoo touted a potential acquirer when any asset in its footprint comes on the market – as it has been with regards to Vivendi’s planned sale of its majority stake in Maroc Telecom, the market leader in Morocco.

However, investments this year are as likely to focus on network upgrades as the group has yet to commercially launch 4G-LTE in any of its markets. 4G launches are likely to be limited to the Middle East for the time being – likely in Qatar and Oman – as many of Ooredoo’s emerging markets are still at the early stages of 3G rollout.

Operator
Market
Group
Ownership
Mobile
Connections
(‘000s)
Market
Share
(position)
% Group
customers
% Group revenue
Indosat Indonesia 65% 58,465 21% (2/10) 63.1% 26.1%
Asiacell Iraq 53.9% 10,030 35% (2/3) 10.8% 20.4%
Nedjma Algeria 74.4% 9,059 24% (2/3) 9.8% 10.3%
Tunisiana Tunisia 84% 7,190 53% (1/3) 7.7% 7.8%
Qtel Qatar 100% 2,206 69% (1/2) 2.7% 18.4%
Nawras Oman 55% 2,149 41% (2/2) 2.4% 5.7%
Wataniya Kuwait 92.1% 2,032 37% (2/3) 2.2% 8.5%
Wataniya Palestine 45.8% 610 19% (2/2) 0.7% 0.9%
wi-tribe Pakistan 86% 206 <1% (8/9) 0.2%
Wataniya Maldives 92.1% 176 34% (2/2) 0.2% 0.4%
Bravo Saudi Arabia 92.1% 164 <1% (4/4) 0.2% 0.7%
wi-tribe Philippines 40% 79 <1% (5/6) 0.1%
TOTAL 92,336 100% 100% 100%

Ooredoo Group mobile connections, ranked by market, Q4 2012
Source: company data, Wireless Intelligence