Vodafone-Led Team Pays $2.1 Billion for Qatar License

Vodafone-Led Team Pays $2.1 Billion for Qatar License

Vodafone Group Plc, the world's biggest mobile-phone company, and its local partner will pay 7.72 billion riyals ($2.1 billion) for Qatar's second wireless license as Vodafone expands in emerging markets.

Vodafone and the Qatar Foundation will start the service in the first quarter of 2009 and must sell a 40 percent stake in the venture to the Qatari public by December, the Supreme Council of Information & Communication Technology said in a statement on its Web site yesterday. Mark Pursey, a Vodafone spokesman, said the company's contribution will be 200 million pounds ($396 million).

Vodafone, based in Newbury, England, has expanded in emerging markets in the past two years with purchases in Turkey and India to make up for slower growth in Europe. In Qatar, owner of the world's largest natural gas field, the group will compete with former monopoly Qatar Telecom QSC in a country of about 900,000 people and a gross domestic product per capita of $75,900, more than double that of the European Union.

``$2.1 billion is fair value by Gulf standards to compete against the region's last monopoly,'' Andrawes Snobar, an analyst at Arab Advisors Group in Jordan, said in a phone interview today. ``Although Qatar's penetration rate is already above 100 percent, they should be able to win share from Qatar Telecom.''

Saudi Telecom won Kuwait's third mobile-phone license in November with a bid of $908 million. Zain led a group that won Saudi Arabia's third mobile-phone license with a $6.1 billion offer in March 2007.

Last Monopoly

Qatar is the last Gulf Arab state to break the monopoly of its state-controlled phone company as it seeks to foster competition and develop the domestic economy. Regional phone companies including Emirates Telecommunications Corp., Kuwait's Zain and Saudi Telecom Co., the biggest, are expanding overseas as their domestic markets mature and competitors arrive.

Vodafone rose 1.6 percent to 163.1 pence as of 11:06 a.m. in London. The stock had lost 15 percent this year before today.

After the initial public offering, Vodafone and the Qatar Foundation will own 45 percent of their venture, the regulator said. Qatar and local institutions will own 15 percent.

``With the agreement of the regulator, we have decided to undertake the IPO in the autumn and we expect services to be launched at the very end of 2008 or early 2009,'' Pursey said.

Vodafone said in January it will invest $400 million in Qatar. Vodafone Chief Executive Officer Arun Sarin yesterday said he will step down in July after reporting a record 6.66 billion pound ($13.2 billion) annual profit.

Winning Bid

Qatar's regulator, known as ictQATAR, said on Dec. 10 the Vodafone-led group beat rivals including AT&T Inc. and Verizon Communications Inc. for the license. The regulator gave no value for the bid made by Vodafone and the Qatar Foundation, which also beat bids from Zain and Emirates Telecommunications.

The Qatar Foundation is a non-profit organization founded by Qatar's ruling Emir in 1995 to promote education, technology, health and culture in the Gulf state, according to its Web site.

Qatar's budget surplus will rise to $2 billion in the financial year beginning April 1, the Finance Ministry forecast in March, assuming an average oil price of $55 a barrel. The commodity was trading at $126.87 a barrel at 10 a.m. in London today. The economy expanded by 12 percent last year and may grow by 15 percent this year, according to government forecasts.