Vodafone Qatar Interview with Qatar Visitor
In an interview with Qatar Visitor Vodafone Qatar CEO Grahame Maher claims Qtel have been too slow to respond to competition, and that their promotions confuse and anger customers.
QV: You're up against a huge competitor in Qtel with massive resources and an entrenched position in Qatar, and you paid close to eight billion riyals to win the licence.
So, our first question is why did Vodafone came to Qatar?
Grahame: Quite a few reasons.
Firstly, to make an investment into the GCC or the Middle East proper, one of the only countries in the world left where the second player position is available.
Secondly, we think the number two position is the best potential position in any market.
Thirdly we had good relationships between our chairman and the royal family in Qatar, so we know our partner and indeed we have the best partner in the market in Qatar Foundation.
Then there is a chance for us to try out a completely different business model here which we think has the capability of being our future business model around the world, and that being where we are not putting up all the money and owning the business, we are a small minority shareholder but we run and manage the whole business.
"...there is a chance for us to try out a completely different business model here."
That is a very interesting model for us to look at for countries like Qatar where we cannot have majority ownership, but it is a lot less costly business model than having to buy full ownership of a business. That would give us the potential to go into many, many more markets, which is a big upside for us.
QV: You're a huge company abroad, so how does it feel to be the small player in Qatar?
Grahame: That's not quite the case. In many countries we are number two, in some countries we are number three, in one or two we are number one, but actually being here, as the number two player, is one of the best positions in the world and the one which we like to have.
Now, Qtel is an early starter, we had a more difficult starting point because we were new, but we were new once in the UK, we were new once in Egypt, we were new once in India, and already we have a twenty percent market share after only a few months.
QV: Is there advantage here in having such a high population turnover?
Grahame: Absolutely, and I think that speaks more to why it is worth going into the market. It is one of the key factors in the Gulf, so even though there is a 120% penetration, or whatever numbers you want to believe, that population changes all the time, so there is always new business coming into the country.
As a result, this population penetration issue, which we would be worried about in many markets, is not an issue in the Gulf countries.
QV: How many users have you got so far and are you meeting with the goals you set?
Grahame: The latest figures we have got on customer numbers was 340,000, which is 20% of the population, and is way ahead of what we expected.
QV: How many more do you see Vodafone getting?
Grahame: I think a lot of the influx we have seen before is the early rush of people, from people who were waiting for Vodafone and so on, so I don't expect that rate to continue. But we expect to see good steady rates now over the next three or four years, five years, and aim towards what we'd like to get, you know, which is forty or fifty percent of the market share.
"...what we'd like to get ... is forty or fifty percent of the market share."
That would see us with a good position as a solid number two, which is our preferred position in the market place.
QV: There must be a section of the population, very low income, which doesn't use mobile phones.
Grahame: Actually, while we don't have a definitive number, most of the population here, more than say, India, even though they are low socio-economic groups, can still afford a mobile and probably have one. There are some who don't, but it is very limited actually, it's quite surprising. The reason being is that an Indian worker in Qatar is probably relatively well off compared to an Indian worker in India. The second thing is that communication here is critical, because the people working here all have family in Nepal, Pakistan, India, so they are generally mobile users - it is not a hundred percent, but it is pretty high.
QV: At the moment Vodafone is making a loss...
Grahame: That's the case, and that would be the case anywhere because what we do initially is spend a large amount of capital on building a network and paying licence fees and then over time we become profitable. I think in the UK it took us four or five years, in Australia it took us seven years, so it's quite common to take some time.
QV: When do you see yourself turning a profit?
QV: What are the biggest challenges you have come across setting up Vodafone here?
Grahame: Really getting the network rolled out, because it has never been done before, not by a private company as such - when Qtel did it, they were the government, and there was no need to go through an approval process to build a network. There was nothing in place for that, so it took a lot of time working with the municipalities to put in processes and systems to be able to allow a whole lot of contractors to be able to build a network.
The other things were the set up costs, the set up issues and finding staff, building systems, all of which took time to achieve, and the other thing was building the coverage, there was an army of problems to solve!
Now, however, we can look back with an immense satisfaction that within 12 months we have achieved mobile coverage of 100% of the country, we have developed systems and processes, we have recruited a whole team to run the business and have 20% population share within 12 months and it lovely to look back and think wow, it really happened.
QV: You have signs up across Qatar next to your temporary sites, saying: "Help us build the world's best mobile network and get rid of the temporary sites." Are you having problems getting permanent sites and how can people help you?
QV: Certainly yes in the early stages, but now I think we have almost completely finished our acquisition of permanent sites, so we are in a very different position to where we were twelve months ago. And what we are doing now is trying to take those temporary sites down.
Twelve months ago, I think we had one site, and today we have well in excess of 350 sites and more than half of those have already been built as permanent, so we have replaced 50% of the trailers, and about another 40 percent of the permanent locations have been found. Now we are just building them - obviously, it takes a while to build them.
QV: Qtel is not the easiest business to compete against. They have raised their game since you came into Qatar, they are taking advantage of their position to bombard their customers with text advertising and they are plastering Qatar with adverts.
Are they playing fair?
Grahame: I think Qtel are a great organisation, actually, and I think they are a good company, it's great to see that they have woken up from what was an extremely slow organisation which never did anything. That's great for the country, great for the customers, and great for Qatar.
And they also play in other markets, so they know the rules, but they have waited too long to respond. They should have done a lot of what they are doing now before we came along, and I think people would have respected that, I think there is now a lot of skepticism from the customers saying how come we only get better service after we have a choice.
"... they [Qtel] have waited too long to respond. They should have done a lot of what they are doing now before we came along..."
But they are a good competitor, I don't see them as a big scary competitor, to be frank, we compete with much bigger business around the world, companies which are far bigger than Qtel, but Qtel is a very good business.
QV: You are paying a much smaller amount of money to win a second fixed-line licence, an area generally considered outside your area of expertise. Is this something you are really interested in?
Grahame: We've run fixed business around the world as well but as you know we are known for mobile. But generally people think we are the number two player in fixed line, or maybe number three, and we think strategically, globally, we'll be more and more in fixed in the future so we still have that position around fixed line businesses. I think the difference, a very important difference, is what we see in the value of the fixed business here and in the rest of the world is actually broadband connectivity and high speed camera access, because that actually delivers what customers want to their home, even on a mobile device.
QV: Are you going to be using your own cables, then?
Grahame: Yes we are.
QV: That'll make a huge difference...
Grahame: Yes, a huge difference. It's unlikely that we are going to use a fixed product, that's not what we are actually competing with. We want to provide high speed broadband and cable delivered to your home so that you could be making a Skype call using wifi and possibly cellular but providing it via cable. Now that might be to every home, it might be to various businesses, that'll all depend on how we can roll out over time, but what we are looking at is bringing the speed of the solution up faster and faster. Even a cable solution at fixed speed helps drive faster mobile.
So I think this differentiation between fixed and mobile in the next five years is going to disappear. You know, is wifi a fixed solution or a mobile solution, that's an interesting question - if you buy the licence it says wifi is a fixed solution, but I am not so sure.
QV: There are people coming into Qatar all the time, and having to make a choice of telephone providers. What can you offer them Qtel can't?
Grahame: What we want to stand for is giving the people choice, innovating and doing things differently and being the customer's champion, so giving people the fair deal, and on that basis not trying to pull tricks and things around people but give them access, open ability and very good value.
I think we are proving that by what we have done so far, with our international calls which are really targeting the people who are coming.
I can give you an example of what we have done. At the moment we are providing a promotion on mobile internet and it is available to people whether they are using pre-paid or red, which is our post paid mobile.
"I hear so many times about people getting their Qtel bill, and getting an amazing number and trying to work out how that happened."
Qtel is responding and doing things on their mobile internet but only to their account customers, not to anyone who is using pre-paid. Talking about international rates, Qtel are also making offers but only to people in certain locations and certain types of customers.
With Vodafone you can be guaranteed that you can get the best value and you are not going to get surprises on your bill which looks a lot higher than you were expecting based on the advertised prices. You will pay what we say, and the deal will be fair, and the final thing will be that you can check your account at any time, you will never get a surprise when you get a bill. I hear so many times about people getting their Qtel bill, and getting an amazing number and trying to work out how that happened. And ours can be checked at any time, and in real time.