VODAFONE AND QATAR FOUNDATION BEAT AT&T FOR MOBILE

UNCLAS DOHA 001174

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECPS EINV BTIO QA
SUBJECT: VODAFONE AND QATAR FOUNDATION BEAT AT&T FOR MOBILE
PHONE LICENSE


1. (U) United Kingdom-based Vodafone and its local partner,
the Qatar Foundation (QF),won Qatar's second mobile phone
operating license. The winning consortium plans to start
operations in 2008 and would compete with government-owned
Q-tel, currently Qatar's sole mobile telephone provider.
Vodafone's successful bid knocked out U.S. bidder AT&T, which
benefited from U.S. government and Embassy advocacy. (Note:
U.S. company Verizon was affiliated with another bidding
consortium, Zain, but that consortium did not request
advocacy.)


2. (U) The Qatar Supreme Council for Telecommunication and
Information Technology announced the winner of the mobile
phone operating license December 10. Under the terms of the
license, Vodafone-QF will be required to sell a 15-percent
stake to the Government of Qatar and a 45-percent stake to
the public in an initial public offering. QF and Vodafone
would equally split the remaining equity holdings. Qatar's
telecommunications regulatory authority, ictQatar, did not
disclose the amount that the winning bidder paid for the
license. The value of the license was initially valued at
one billion Qatari riyals by most industry experts.
According to Embassy sources, Vodafone bid around 2.25 Qatari
riyals, or roughly 620 million U.S. dollars, in its
successful effort.


3. (U) Prior to the issuance of Law Number 34 by Amiri
Decree in November 2006, Q-tel held a complete monopoly in
the telecommunications market, and there was no regulatory
agency. The decision to allow a second mobile phone operator
in Qatar is consistent with the government's stated aim to
liberalize the telecommunications sector. Competition in the
mobile phone sector is expected to begin in 2008, and the
fixed-line market is on track for the establishment of a
competitor to Q-tel during the same year.


4. (U) Vodafone's partner, the Qatar Foundation for
Education, Science and Community Development, was founded by
the Amir in 1995 as a private, non-profit organization
charged with investing in programs in the fields of
education, health, and community development. Sheikha Moza
bint Nasser Al-Misned, consort of the Amir, chairs the QF's
board of directors. Under her leadership, a number of
separate but interrelated bodies have been established under
the QF umbrella, including branch campuses of leading U.S.
universities.


5. (SBU) Comment: The decision to award the license to
Vodafone-QF means that the only foreign player in Qatar's
telecommunications market is partnered with a governmental
non-profit organization -- which is run by the Amir's wife --
and shares the market with another government entity, Q-tel.
The predominant role of the Government of Qatar, and the
family of the Amir, in the post-monopoly mobile telephone
sector casts doubt on the government's stated goal of
liberalizing the telecommunications sector.
RATNEY