Launch of New Telecommunications Licenses for Fixed ... · PDF fileOverview of the Economy and the Telecommunications Sector of the State of Qatar Launch of New Telecommunications

Overview of the Economy and the Telecommunications Sector of the State of Qatar

Launch of New Telecommunications Licenses for Fixed & Mobile Services

1

Disclaimer

Source: ictQATAR

This document is based on past and forward-looking information that has not been generated by ictQATAR. We believe such information to be reliable and adequately comprehensive but we do not guarantee that such information is or will be in all respects accurate or complete.

The purpose of this document is to provide a short overview of the Qatari economy and telecommunications market. Companies interested in applying for any of the licenses should conduct their own more detailed analyses in order to build their business plans.

ictQATAR shall not be obligated to maintain, update or correct this market overview document and shall not be liable for any damage or loss caused by the use of this information, including without limitation lost profits or other consequential damages.

2

Telecommu-nicationssector

The telecommunications sector has shown strong financial performance historically and is well positioned to benefit from the country’s economic and population growth

Country economy

Executive summary

Qatar offers high economic growth mainly driven by the Oil & Gassector and a myriad of government initiatives in both energy andnon-energy-based industries

Source: ictQATAR

Telecommu-nicationsregulatory framework

The State of Qatar and the telecommunications regulator (ictQATAR) continue to support the development of the sector by liberalizing the market. Qatar Telecom (Qtel)’s monopoly will end with the award of 1 new mobile license and 1 new fixed license

3



Country economy

Executive summary


Source: ictQATAR



4

Qatar’s economic performance has been remarkably strong during the past years with an annual real GDP growth rate of 8.4%Real GDP indexPercent, 2001 = 100%

Source: Qatar Planning Council; EIU January 2007

150142

134

111107100

2001 2002 2003 2004 2005 2006

+8.4

CAGR

Nominal GDP of USD 53 billion

Benchmark: 2001–06 Real GDP CAGRPercent

Bahrain5.0MENA5.0KSA

4.5Oman2.9US

1.9EU25

8.5UAE8.4Qatar8.2Kuwait

6.8

5

Projections for the next 5 years by external sources predict that the economy should continue to grow at a healthy rateReal GDP index forecastPercent, 2001 = 100%

Source: Qatar Planning Council; EIU January 2007

228213

198178

162150

2006 2007 2008 2009 2010 2011

+8.7

8.7Qatar6.3UAE

5.4Kuwait5.5Bahrain

5.0MENA4.7KSA

2.6US2.2EU 25

Benchmark: 2006–11 Expected real GDP CAGRPercent

CAGR

6

The Oil & Gas sector remains the largest GDP contributor, accounting for more than 60% of the total GDP valueBreakdown of GDP by sectorsPercent

Source: Qatar Planning Council

Oil & Gas

9Government Services

7Manufacturing

5Finance, Insurance, Real Estate, & Business Services

5Construction 4

Trade, Restaurants, & Hotels 3

Transport & Communications

4Other

Evolution 2001–06 Percent

58 58 59 54 60 62

02

41

03

46

04

40

05

38

2006

Other

Oil & Gas

42

2001

42

62

7

Qatar has an abundance of natural gas resources sold at very competitive prices

* Trillion cubic meters** Rest of the world

*** Million British Thermal UnitsSource: BP Statistical Review 2006; press clippings

Qatar

World proven natural gas reservesPercent, 2005

15

44

14

27 Russia

Iran

RoW**

13.10EU 25

US

1.60Russia

1.00Qatar

0.75Iran

0.75–1.20GCC avg

8.90

Industrial gas priceUSD/MMBTU***, 2006

100% = 180 TCM*

8

The 19% annual increase in LNG exports will continue to support the growth in the country’s GDP

GDP contribution from Liquefied Natural Gas (LNG) exports is forecasted to increase by 19% over the next 5 years*Qatar’s forecasted LNG productionMillion tons per annum (mtpa)

* Assuming constant gas pricesSource: Qatargas; RasGas; QNB

59.459.351.9

37.6

28.224.8

2006 07 08 09 10 2011

+19%

New capacity comes online

9

Expansion of the pipeline network would generate more revenues from gas exports

Source: Dolphin Energy Web Site; QNB

Qatar Petroleum has signed an agreement with Dolphin Energy from Abu Dhabi to export 2 billion cubic feet per day of natural gas – the project is valued at USD3.5 billion.

10

Qatar is also set to become a key global player in energy-based industries

* Includes ethylene, propylene, PE, ammonia, urea, benzene and styreneSource: Tecnon; CMAI; IFDC; J.F. King; SRI; broker reports; press articles

Total capacityThousand tonnes per year

Aluminum

Steel

Petro-chemicals*

Impact

Would make Qatar one of the top 15 aluminum producers in the world

Would capture 0.6% of world’s steel capacity additions

Would capture 5% of ethylene and polyethylene world growth and 2% of worldwide fertilisers additions

440

150150150

+193%$1.3bn

$0.7bn

$6.1bn

3,5501,5001,2501,250

+184%

Norsk Hydro 1st phase

Qasco green-field project

10,1368,3296,8596,625

2005 06 08E 2010E

+53%

Investments

11

Financial

• Establishment of Qatar Financial Centre to attract global financial institutions and help create a sound and transparent capital markets frameworks

Several government initiatives have been launched to diversify the economy from Oil & Gas dependency

Source: Press clippings; Qatar Financial Center Authority annual review 2006

Description

Economic zones

Infra-structure

Education

• 10 km2 Qatar Free Zone (QFZ) to be completed by mid 2008

• 9 km2 logistics and storage zone (LSZ) to support the growing shipping and trading activities in Qatar

• Development of new airport by 2016 with capacity for 50 million passengers per year

• Development of Pearl-Qatar offshore island with 400 hectare of residential space

• Development of Lusail township by 2010-2020• Promoting Doha as the sporting capital of GCC• Building Bahrain-Doha causeway

• Creation of Qatar Foundation & Education city with 2,500-acre campus hosting leading international universities including Cornell, Carnegie Mellon, Texas A&M, and Georgetown University

63

17

13Infrastructure

3Utilities

Total

Other

Tourism

Airlines 15

15

Government investments over the next 5 yearsUSD billion

12

The new residential projects are expected to house around 280,000 inhabitants by 2020

Source: Projects' Websites

Al-Khor (40,000 residents)Pearl-Qatar (40,000 residents)

Lusail (200,000 residents)

13

The country has seen double-digit growth in trading activities and foreign investments in the last 5 years

Source: Qatar Planning Council; Economic Intelligence Unit January 2006

USD million

Exports

Net foreign direct investment

Imports

14,30010,100

6,0004,9004,1003,800

+30%

30,70025,300

18,50013,20010,80010,700

+23%

2,0001,8001,9001,6001,600700

2001 02 03 04 05 2006

+23%

CAGR

14

• Qatar’s population is projected to continue to grow at 5.3% annually and to reach 1.34 million inhabitants by 2015

• Majority of the growth has been fuelled by the influx of foreign labour to fill the market shortage notably in construction and other industries

The economic growth has spurred an overall increase in populationNo. of inhabitants Million


1.341.27

1.201.14

1.081.03

0.980.93

0.880.84

0.800.76

0.720.680.65

2001 02 03 04 05 06 07 08 09 10 11 12 13 14 2015

+5.3%

CAGR

Actual Estimates

15

82% of the population is concentrated in the capital city Doha and its closely surrounding area


Qatar has 10 municipalities … … two of which, Doha and Al Rayyan, are home for 82% of the population

Total area = 11,437 km2

Ash Shamal

Al Ghuwayriyah

Al Khawr

Umm Salal

Al Jumaliyah

Jariyan al Batnah

Mesaieed

Al-Wakrah

38%

44%

838,000

2006

Other

Al Rayyan

Doha

100% =

18%

82% in an area of 1,025 km2

16

22% of the population is less than 15 years oldBreakdown of population by agePercent

Source: Economic Intelligence Unit January 2007; World Fact Book

26 22 22

2

72

0.6 mn

2000

2

75

0.8 mn

2005

2

76

1.1 mn

2010F

65+ yrs

15–64 yrs

0–14 yrs

= 100%

Benchmark: 0–14 yrsPercent

• Qatar: 22• UAE: 25• Kuwait: 27• Bahrain: 28• KSA: 42• Oman: 43• Average GCC: 31

17

63% of the population is economically active

5063 63

50

0.6 mn

2000

37

0.8 mn

2005

37

1.1 mn

2010F

Economicallyinactive*

Economicallyactive

100% =

Economically active population Breakdown of workforce by sector, 2004

* Economically inactive population includes the elderly and children under the age of 15Source: Economic Intelligence Unit; Qatar Planning Council

27Construction

12 Public admini-stration12

DomesticServices

12Trade

7Education, Health & Social

Other

13

9Manufacturing

4Transport &Communication

4

Mining & Quaring

Construction is the largest sector in terms of jobs created, indicating the large amount of development occurring in the country

Percent

18

The Qatari population enjoys one of the highest GDP per capitain the worldNominal GDP per capita at current pricesUSD, 2006

Source: International Monetary Fund

87,955

39,213

35,204

31,051

21,447

14,715

13,846

27,767

33,397

43,444

62,914

Luxembourg

Qatar

US

UK

Germany

UAE

Kuwait

Spain

Bahrain

Saudi Arabia

Oman

Ø 37,359

19



Country economy

Executive summary


Source: ictQATAR



20


The telecommunications sector has shown strong financial performance historically and is well positioned to benefit from the country’s economic growth and population boom

Executive summary

Source: ictQATAR

The telecommunications sector plays an important role in the economy and has shown strong growth in revenues and subscribers

Overall sector

Mobile

Fixed

Mobile services are the main driver of growth in sector revenues

Fixed services have shown steady growth over the past years

Data Internet and broadband services have been increasing significantly over past years

21

100

14

5

10

14

14

19

24GovernmentServices

Manufacturing

Finance, Insurance and Real Estate

Construction

Trade, Restaurants& Hotels

Communication

Other services

Total

GDP breakdown* 2006

Labour force breakdown*2004

The Telecommunications sector plays an important role in the economy accounting for 5% of the non-oil GDP value

100

29

1

15

28

10

4

13

Percent

* Excludes oilSource: Qatar Planning Council

22

Background Products and Services

Currently, Qatar Telecom (Qtel) Q.S.C has monopoly in the fixed and mobile markets

• Exclusive telecommunications provider since 1987

• Listed on the Doha Securities Market since 1998

• Subsidiaries in Oman, Singapore and Indonesia through participation in Asia Mobile Holdings

• Recently acquired 51% of Wataniya, the Kuwaiti mobile operator, for USD 3.8 billion

Residential• Landline• Mobile (GSM)• Cable TV service• Internet services

Business• Landline• Mobile (GSM)• Cable TV service• Internet services• Data services

Source: Qtel website

23

Qtel annual revenues*USD million

Annual revenue per capita, 2005USD

Sector revenues have been growing at 23% annually, making Qatar the country with the highest revenue per capita in the region

1,083

781

624533

442378

2001 02 03 04 05 2006

+23%

263

393

664

690

720

981Qatar

Kuwait

Bahrain

UAE

KSA

Oman

* Numbers exclude revenues from international subsidiaries & revenues classified as ‘other’ in Qtel annual reportsSource: Qtel annual reports; Arab Advisors Group

CAGR

24

Qatar has high penetration rates in the fixed and mobile markets but moderate rates in the internet marketPenetrationPercent, 2006

69

62

20

28

107

68

20

100

126

114

103

110

15

22

7

25

48

35

7

82

49

38

133

53

Fixed line* Mobile** Internet***

45

54

63

63

67

70

71

83

85

98

98

117Qatar

Singapore

Bahrain

UAE

Kuwait

Syria

KSA

EU 25

Lebanon

Egypt

Oman

Jordan

* Fixed line penetration = total fixed residential lines divided by no. of households** Mobile penetration = total reported mobile lines divided by population

*** Internet penetration = total internet accounts(dial-up and broadband) divided by no. of householdsSource: Arab Advisors Group, Pyramid Research, Operators annual reports

25


Executive summary

Source: ictQATAR



Overall sector

Mobile

Fixed




26

Mobile services account for the majority of the revenues and growth in the telecommunications sector

Source: Qtel annual reports

+23%

68%

32%

378

2001

47%

53%

442

02

41%

59%

533

03

39%

61%

624

04

36%

64%

781

05

35%

65%

1,083

2006

Total revenues generated by segmentUSD million

Fixed and Internet

Mobile

5-year growthCAGR

8%

42%

Numbers include all revenues generated from national and international outgoing calls

CAGR

27

Mobile service penetration is high and has shown a steady annual growth in the last 5 years

Source: Qtel annual reports

Mobile line penetration rate% of population

110

90

6552

3927

2001 02 03 04 05 2006

+32%

No. of SubscribersThousands

178 267 377 490 717 920

CAGR

28

Both subscribers and revenues from mobile serviceshave grown substantially in the past 5 years

* Numbers exclude revenues from international subsidiariesSource: Qtel annual reports

SubscribersThousands

RevenuesUSD millions

920717

490377

267178

2001 02 03 04 05 2006

+39%

702504

382313232

121

2001 02 03 04 05 2006

+42%

CAGR

29

Breakdown of users by type of service Regional comparison, 2006

In line with other countries in the region, the majority of mobile subscribers in Qatar use prepaid services

72%

490

04

22%

78%

717

05

20%

80%

920

2006

+36%

51%

49%

267

2002

39%

61%

377

03

28%

84

82

81

80

78

68

16Bahrain

18UAE

19Kuwait

20Qatar

22Oman

32KSA

PostpaidPrepaid

Thousand Percent

CAGR

Source: Pyramid Research; Qtel annual reports

30

Qatar has one of the highest mobile usage in the region with postpaid subscribers spending triple the time of prepaid users

Source: Pyramid research

Minutes of use per month

55

85

89

104

176

179

193

173Qatar

UAE

Kuwait

Oman

KSA

Jordan

Bahrain

Egypt 486

274

496

307

376

480

539

554

Average prepaid Average postpaid

31

Average national price per minute Activation fee

Prepaid minute rates are relatively high compared to the rates charged for the same services in the regionUSD, October 2006

0.08

0.09

0.12

0.14

0.15

0.15Qatar

Kuwait

KSA

Oman

Bahrain

UAE

Source: Arab Advisors Group

20

44

14

11

55

44

32

Postpaid minute rates are in line with rates charged across the region

Source: Arab Advisors Group; operators' websites

USD, October 2006

0.08

0.08

0.09

0.09

0.09

0.10KSA

Qatar

Bahrain

Kuwait

Oman

UAE 50

25

47

7

69

13

Average national price per minute Activation fee

33


Executive summary

Source: ictQATAR




Overall sector

Mobile

Fixed Fixed services have shown steady growth over the past years


34

The fixed line penetration has remained high over the past 5 years

* Assumes 131,000 households in Qatar in 2006Source: Arab Advisors Group

Fixed line penetration rate*Percent of households

117120121123

143135

2001 02 03 04 05 2006

No. of residentialsubscribersThousands

117 128 126 136 146 154

35

Both subscribers and revenues from fixed services have been steadily growing over the past 5 years

* Numbers exclude revenues from international subsidiariesSource: Qtel annual report

SubscribersThousands


49 59 55 59 64

128

177

2002

126

185

03

136

191

04

146

205

05

154

217

2006

+5%

204185176167162

2002 03 04 05 2006

+6%

CAGR

Residential

Business

36

Average international call price per minute* Average fixed-to-mobile call price per minute

International call prices are low in Qatar while fixed-to-mobile call prices are high compared to rates in the region

0.97

0.56

0.72

1.19

1.82Kuwait

UAE

Oman

KSA

Qatar

0.13

0.08

0.04

0.12

0.12

KSA

Qatar

Oman

UAE

Bahrain

Average fixed call cost per minuteUSD

* Represents average price per minute for all countries available to call from operators’ networkSource: Arab Advisors Group; operators’ websites

37

Consumer activation fee Consumer monthly subscription

Residential connection and subscription fees in Qatar are in line with fees charged in the region

49

26

53

55

80KSA

Qatar

Bahrain

UAE

Oman 16

4

3

9

8

Residential connection and subscription chargesUSD

Source: Operators’ websites; Arab Advisors Group

38


Executive summary

Source: ictQATAR





Overall sector

Mobile

Fixed


39

Internet accounts* Personal computers

The overall number of Internet subscribers has increased significantly in the last 5 years

70

53

37321913

2001 02 03 04 05

+39%

2006

140134127

119110

100

2001 02 03 04 05 2006

+7%

Thousands

* Dial-up and broadbandSource: Arab Advisors Group; Euromonitor International

40

147

128

109

90

68

47

2511

20

03 04 05 06 072002 08 10 2011

+26%

09

Despite remarkable past growth and a promising future, broadband penetration still lags behind other developed markets

Broadband subscriptionsThousands

Actual Estimates

Source: Arab Advisors Group

CAGR

Broadband penetrationPercent of households, 2006

72Hong Kong

62Netherlands

61Singapore

UK

33Qatar

30Germany

44France

42

41

Dial-up rates per minute Broadband subscription per month, 512 kpbs

Broadband and dial-up rates are moderately priced compared to charges for similar services in the region

Qatar

0.008Kuwait

0.008Oman

0.006UAE

0.019Bahrain

0.013KSA

0.009

131Kuwait

92KSA

66Bahrain

55Qatar

51UAE

31Oman*

* Excludes usage charges of USD2.6 per 1 gigabyteSource: Operators’ websites; Point topic

345

92

200

165

162

311

Residential Business

USD

Broadband prices, however, are high compared to European benchmarks with average monthly subscription of USD 25

42

Both Internet accounts and revenues have grown significantly over the past 5 years

Source: Qtel annual report

Internet accountsThousands


7053

37321913

2001 02 03 04 05 2006

+39%

64

4334

272117

2001 2006050403

+30%

02

CAGR

43



Country economy

Executive summary


Source: ictQATAR



44

The regulatory framework of the telecommunications sector has undergone significant changes in the last 10 years

Source: ictQATAR

20041987 2002 2006

Establishment of the Qatar Public Telecommuni-cation Corporation

1998

Transformation of the Qatar Public Telecommunication Corporation into Qatari shareholder company (Qatar Telecom (Qtel) Q.S.C.)

Establishment ofthe Information/Technology and Communication Committee

Establishment of the Supreme Council for Information and Communications Technology (ictQATAR)

Promulgation of the Telecommunication Law providing the regulator the power to issue new licenses

45

To enable the community at large to use information and communication technology to improve the quality of life, actively contribute to the social and economic development of our nation and transform it into a truly knowledge-based and progressive society

The Supreme Council for Information and CommunicationsTechnology (ictQATAR) has the responsibility to regulate thetelecommunications sector

• Connect Possibilities• Enrich Knowledge• Inspire Knowledge

• Create core engine of the information-based economy

• Universalize access to social services through technology

• Democratize learning to create a knowledge-based on-line society

• Create technology multiplier-effect to all sectors

• Extend reach of political reforms through real-time communication

• Connect opportunities for economic participation in all facets of the society

• Reinforce culture of a progressive nation

Source: ictQATAR

46

ictQATAR’s regulatory authority is composed of three sections

Regulatory authority

Policy and economics

Technical department

Legal department

Key responsibilities

• Regulatory policy and planning • Licensing • Tariffing • Competition

• Spectrum management• Interconnection management • Quality of services

• Consumer protection• Dispute resolution • Legal proceeding

Source: ictQATAR

47

Decree Law No. (34) Major provisions

The Telecommunications Law of 2006 governs all aspects of the telecommunications sector and provides ictQATAR the mandate to issue new licenses

Source: Decree Law No. (34) of 2006 on the promulgation of the Telecommunications Law

• Enhance the sector’s performance through encouraging competition

• Encourage the introduction of advanced and innovative information and telecommunications technologies

• Establishing a fair, objective and transparent licensing regime for service providers

• Promoting universal service• Grant, amend, renew, suspend, and

revoke all types of licenses• Set the terms of interconnection and

access between service providers• Observe a no conflict of interest

policy in all dealings of the Council contracts and business

ictQATAR has started the process to issue 1 new mobile and 1 new fixed license

48

AppendixAbbreviations

Source: ictQATAR

• GDP: Gross Domestic Product

• Real GDP index: Real Gross Domestic Product indexed to the year 2001 as a base case

• GDP per capita at current prices: Total country’s nominal GDP measured at current prices divided by total population

• GDP per capita at PPP: Total country’s nominal GDP measured at purchase power parity prices divided by total population

• MMBTU: Million British Thermal Unit; a unit to measure natural gas

• LNG: Liquefied Natural Gas

Documents

Launch of New Telecommunications Licenses for Fixed ... · PDF fileOverview of the Economy and the Telecommunications Sector of the State of Qatar Launch of New Telecommunications