Ooredoo’s network modernisation to benefit 250mn users

By Pratap John/Chief Business Reporter

In its markets with “fixed infrastructure,” Ooredoo is deploying fibre-enabled integrated services that facilitate new revenue opportunities, Group CEO Dr Nasser Marafih has said.

“We are tailoring fibre to meet each market’s needs and continuing to invest ahead of demand in order to deliver the leading customer experience, such as our QR1bn investment in the Ooredoo fibre network in Qatar,” Marafih said in the company’s latest annual report.

Ooredoo, he said, has made “significant progress” in its fast-paced network modernisation programme, which will transform the customer experience for a potential audience of more than 250mn people.

As a “smarter broadband provider,” Ooredoo is using latest technology in order to introduce 4G long-term evolution (LTE) services and manage the transition from 2G to 3G across key markets.

Ooredoo Qatar and Wataniya Kuwait are in the process of commercially launching 4G LTE mobile broadband services, which Nawras (Oman) had launched in February.

In Qatar Ooredoo will launch 4G services on data on MiFi within two weeks, group chairman HE Sheikh Abdullah bin Mohamed bin Saud al-Thani recently told Gulf Times.

Infrastructure sharing in key locations such as Indonesia has allowed the company to offer high-quality services while keeping costs down and sharing investment risk. This has been especially useful in developing technological areas like 4G LTE mobile broadband networks.

“The improvements delivered by the programme will enable faster Internet speeds, both indoors and outdoors, so that businesses will be able to teleconference and telecommute more effectively and consumers can easily and quickly update their online social media accounts,” he said.

Marafih said there were also significant investments for network enhancements in Palestine and Tunisia, where Ooredoo connected entire communities previously without reliable mobile access and further network enhancements in Indonesia, Iraq and Algeria.

Network modernisation will enhance revenue and cost savings. It is also an investment for future, enabling Ooredoo to deliver new technologies enabled by 3G, Fibre and 4G LTE as and when it becomes viable to do so.

“Our cost optimisation strategy has helped to reduce overhead and strengthen our profitability. Leveraging our scale and global presence, we are pursuing frame agreements with suppliers at all levels that will help ensure we secure the best value for our investment,” Marafih said.

In 2012, he said, Ooredoo developed a “full programme to further enhance its management model into one with a more integrated approach, to improve strategic guidance and management.”

“This will be rolled out across the business in 2013,” Marafih said.

Fitch affirms ratings on Ooredoo at A+ with stable outlook

By Santhosh V Perumal/Business Reporter

Global credit rating agency Fitch has maintained Ooredoo’s (Qatar Telecom) long-term foreign currency issuer default rating (IDR) at ‘A+’ with a stable outlook.

Qtel International Finance’s global medium-term notes programme, guaranteed by Ooredoo, have also been affirmed at ‘A+’.

The affirmation reflects Fitch’s assessment of the sovereign’s creditworthiness due to Ooredoo’s strong operational and strategic ties with Qatar, which directly and indirectly holds 68% ownership of Ooredoo, the rating agency said.

“This implied state support underpins the strong rating category and offsets risks associated with diversification into weaker rated emerging markets, slowing sector growth and merger and acquisition (M&A) risk,” Fitch said.

Although Ooredoo’s revenues continue to grow at about 6% in 2012, in excess of western European players, Fitch, however, said like most incumbent operators, Ooredoo is also “experiencing a combination of maturing mobile markets, strong competition for remaining customers and some technology disruption.”

The group has responded by shifting strategy towards improving operational efficiency and driving mobile data products and has succeeded in stabilising margins. Fitch expects “continued pressures” in this area in the years ahead and it will remain challenging for Ooredoo to achieve past growth rates.

Ooredoo generates 28% of its consolidated EBITDA (earnings before interest taxes depreciation and amortisation) from its key Gulf markets of Qatar and Kuwait.

The balance of EBITDA is primarily generated from Indonesia, Iraq, Algeria, and Tunisia. These “weaker rated” countries continue to generate stronger headline growth than domestic markets but are exposed to higher political risks.

Currency fluctuations and access to cash at the operating subsidiaries can also “prove difficult in adverse political circumstances”, according to Fitch.

On M&A, Fitch said large majority controlled acquisition targets which have solid telecoms market positions in Middle East and North Africa and Asia Pacific cannot be ruled out. “These are generally not cheap and can spike leverage levels quite significantly,” it said, adding Fitch continues to treat any acquisition as event risk, in line with its methodology.

Observing “controlled” financial policy, the rating agency said Ooredoo’s own leverage guidance is 1.5 to 2.5 times net debt/EBITDA and while the group was well within these levels as at 2012 (1.9 times as reported by the company).

Fitch draws comfort from its opinion that if the group breached these levels and struggled to de-leverage within a short forecast period (12 months), equity support from would be forthcoming to reduce the position and place leverage levels on “a more stable footing”.

Ooredoo had previously announced that the Standard & Poor’s reaffirmed ‘A’ long term and ‘A-1’ short term rating with negative outlook, while Moody’s re-affirmed a ‘Aa2’ rating with a stable outlook.